Draft treaty changes soothe Parliament

Elmar Brok.jpg

The new fiscal compact came a step closer to final agreement yesterday (12 January) following a deal struck by European Council officials and disgruntled MEPs who had slammed the latest draft of the treaty a day earlier.

The third draft of the compact – leaked on Wednesday (11 January) on the website of the British think tank Open Europe – was welcomed by UK Conservatives since it reduced explicit references to the single market, which the British want preserved as EU prerogatives.

But a statement from leading MEPs said the wording was “incompatible with the existing EU treaties”, claiming that it failed to respect the “community method” of decision-making, where EU institutions take precedence over national governments.

Parliament’s bark worse than bite

The statement was jointly signed by Elmar Brok (EPP, Germany), Roberto Gualtieri (S&D, Italy), Guy Verhofstadt (ALDE, Belgium) and Daniel Cohn-Bendit (Greens/EFA, France).

Although the MEPs have no power to push for amendments to the new treaty, noisy criticism of its contents could disturb the negotiations, and thereby provoke market jitters.

A source close to the negotiations revealed to EURACTIV that on Wednesday night (11 January), Elmar Brok secured two significant changes to the wording of the draft.

Brok asked for more explicit reference to the EU treaties – to underline that the compact will be compatible with these – and also secured a clause granting the leaders of the European Parliament’s main political groups the right to address eurozone summits.

To be agreed in January, signed in March

The source said that, following the deal, the fiscal compact remained on track to be agreed by the end of January, to enable heads of government – meeting for the summit scheduled now for 30 January – to focus on measures for growth, rather than debating the new treaty.

The Council remains optimistic that one more working group meeting may now be required before the compact is finally agreed, although more can easily be held, but the January summit will not become a signing ceremony.

“The completed document will need to be translated into all the signatories' languages, and for that reason the deadline of March for the signing remains realistic,” another Council official said.

Faced with a UK veto, EU leaders agreed that a new intergovernmental treaty should tighten fiscal discipline in the eurozone and address the bloc's debt problems.

The treaty is expected to be signed by March 2012 and opened to ratification by nations outside the 17-member eurozone.

The treaty - or fiscal compact, as it is known - will force member states to run a balanced budget and limit public deficits to 0.5% of gross domestic product in an effort to avoid a repeat of the sovereign debt crisis currently shaking the EU.

Where debt is lower than 60% of GDP, deficits of up to 1% would be tolerated. Temporary deviations will only be allowed in cases of unusual event with a major impact on the financial position of the government or in periods of severe economic downturn for the euro area.

  • 30 Jan. 2012: EU heads of state summit, fiscal compact to be agreed beforehand, if negotiations continue on track
  • 1-2 March 2012: Fiscal compact treaty to be signed at EU summit in Brussels.

Subscribe to our newsletters