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EU agrees on coordinated action, financial sanctions

Text by News Wires

Latest update : 2010-05-21

European Union finance ministers, meeting in Brussels on Friday, agreed to improve economic policy coordination and to toughen sanctions against eurozone countries that break deficit rules.

AFP - European Union finance ministers on Friday agreed the need for sanctions including cash penalties for eurozone countries that breach toughened deficit limits, bloc president Herman Van Rompuy said.

"One of the conclusions... was a very clear broad consensus on the principle of having financial sanctions and non-financial sanctions," Van Rompuy told reporters after the first meeting of a special task force set up to reform pan-European 'economic governance.'
  
"I was surprised and pleased that everybody was ready to go ahead with a strong Stability and Growth pact," he added, referring to rules restricting deficit and debt levels that eurozone paymaster Germany wants heavily reinforced in the wake of huge debts accumulated in Greece, Spain, Portugal and elsewhere.
  
The move for sanctions -- proposed by Berlin and the European Commission as the withholding of EU funding and the temporary voting rights in the bloc's decision-making for repeat offenders -- was the only concrete understanding to emerge from the Brussels talks.
  
Van Rompuy's task force, set up by the EU leader in March, and which is to report back with final conclusions by October, includes most EU finance ministers.
  
It is seeking to draw lessons for the long-term management of problems caused by the deep holes in public finance across the bloc.
  
However, the assembled ministers did not discuss a Belgian plan, which Van Rompuy put to them, for pooling eurozone debt.
  
Nor was there discussion of a German proposal to declare the most insolvent economies bankrupt.
  
Van Rompuy said the task force would also focus on finding ways to reduce divergences in competitiveness between individual European economies, while working to come up with "effective" crisis resolution management for the future and sharpening institutional flexibility.
  
He said any thoughts of treaty changes would be left until the reflection process was further down the line.

Date created : 2010-05-21

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