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Europe

France, Germany seek changes to Lisbon Treaty at EU summit

Text by News Wires

Latest update : 2010-10-28

France and Germany have unveiled plans to create a crisis-resolution mechanism at a summit of EU leaders in Brussels. The controversial move would see sanctions placed on EU member states that repeatedly overspend.

REUTERS - European Union heavyweights Germany and France launched their bid on Thursday to convince the rest of the EU that the bloc's main treaty must be changed to help avert new financial crises.

The Franco-German plan, which proposes changing the Lisbon treaty to create a permanent system for handling meltdowns like the Greek debt collapse, faces strong opposition from many EU member states at a two-day summit in Brussels.

The summit is expected to sign off on a new set of EU budget rules, including tougher sanctions on member states that fail to keep their deficits and debt levels in check.

But the meeting is likely to focus on treaty change, which many countries are reluctant to support because of concern about the political fallout from amending a charter that took eight years to negotiate and became law only 10 months ago.

In a sign that momentum towards change may be growing, Finnish Prime Minister Mari Kiviniemi issued a statement before the summit backing the move -- which Finland had suggested earlier this week it opposed.

"The euro area needs a credible permanent crisis mechanism to ensure the financial stability of the euro area as a whole," she said. "If this new system requires treaty change, then treaty change should be done."

Speaking in Berlin before the summit, France's European affairs minister, Pierre Lellouche, said countries were warming to the Franco-German position, which he called a gift to Europe.

"There is a sense of realism that will triumph at the end of the day," he told reporters, although he said there likely would be some "dramatisation" at the two-day summit and acknowledged that agreement may not be reached on Thursday.

Germany wants limited alterations to ensure there is a permanent and legally sound crisis-resolution system in place for countries that use the euro and has threatened to block the budget reforms if no deal is reached.

While a large number of the EU's 27 member states see the logic in Germany's proposal and may support it in principle, they need convincing that a change to the treaty is absolutely necessary to set up the mechanism, and want strict assurances that any agreed changes will be narrowly defined.

The EU's executive Commission believes the mechanism can be created without having to change the treaty.

Any change to an EU treaty must be approved unanimously and ratified by all member states, either in a vote of parliament or via a referendum. The European Parliament also must agree.

Growing support for amendments?

German Chancellor Angela Merkel hopes other EU leaders can be convinced minor adjustments are needed. She wants the summit to give Herman Van Rompuy, the president of the European Council, a mandate to explore how the process could be carried out and implemented.

In an agreement struck in the northern French town of Deauville on Oct. 18, France and Germany said they wanted to have concrete treaty change proposals on the table before an EU summit next March.

Germany's aim is to have the changes in force before 2013, when the EU's temporary mechanism for handling the euro zone debt crisis, a 440-billion-euro ($600-billion) IMF-backed fund called the European Financial Stability Fund, expires.

The EFSF is taxpayer funded and Germany fears it could violate a clause in the Lisbon treaty against bailouts. It has faced legal challenges in Germany's constitutional court.

"The new rescue mechanism has to be legally sound. This will only succeed if there is a change in the EU treaties," Merkel told the Bundestag lower house on Wednesday.

When Germany, the EU's biggest economy, raised the possibility of changing the treaty it looked to have little support. But since the deal struck with France, which aligned the EU's two most powerful players, it has gained momentum.

Britain, which opposes any treaty amendments that could transfer more power to Brussels, has indicated it could back the proposal if it affects only the euro zone.

As part of its proposal, Germany also had demanded the suspension of voting rights for states that fail to keep their budgets in check. But that stipulation faces strong opposition and could be dropped as part of the bargaining process.

 

Date created : 2010-10-28

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