Troubles mount for the EU with their bid to re-draw an economic government

BRUSSELS (AFP) – Plans to radically re-draw cross-border economic government across Europe hit a stumbling block on Monday 10 days from a deadline for concrete action set by European Union leaders.

The fourth meeting of EU president Herman Van Rompuy's "task force," charged with learning the lessons of the global financial crisis and the debt chaos it left in its wake across the eurozone, ended with "too many voices, too may views," in the words of one minister, Slovakia's Ivan Miklos.

"The discussions are stuck, there's a block," admitted a European diplomat after some four hours of talks. "It can't be ruled out that with signs of economic trouble up ahead, certain governments are less inclined than before to toughen budgetary discipline."

An "in-depth discussion on national fiscal frameworks, macro-economic surveillance and sanctions," according to Van Rompuy, resulted in an order for experts to "pursue their work" enabling him to complete his "oral" report to national leaders at a summit on September 16.

However, a six-line statement made no reference to detailed ideas repeatedly raised over recent months including potential "financial sanctions" for persistently wayward eurozone countries.

Miklos' country is one of nine eastern European member states that have newly issued a demand that the costs of pension reform be written off in their deficit and debt reporting, adding a new complication to the drive to craft automatic sanctions for offenders
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He stressed that "if we want to consider debt as part of the sanctions, this is connected," but warned that "there are a lot of open questions" which resulted in what he termed "insufficient progress."

Ministers broadly agree that the EU's Stability and Growth Pact, which restricts room for maneouvre with national finances, needs strengthened, but they appear no closer to seeing eye-to-eye on when automatic penalties should kick in.

Germany's Wolfgang Schaeuble said Europe would "have to be a little bit patient" in order to come up with "creative better rules for the preventive character of the (pact)."

On his way into the talks, he had already conceded that with each passing week it seemed that "the enthusiasm for learning the lessons is weakening bit by bit."

Sanctions ideas including penalties for poorer countries or the suspension of voting rights -- the favoured mechanism in Berlin and Paris -- "are do-able but very complex to put in motion," warned a top-level diplomat who requested anonymity.

"The first (idea) risks being seen as discrimination by Europe's poor nations because they are the biggest recipients of grants," the source added. "The second raises major legal problems with treaty change doubtless required."

Others, though, gave a more upbeat assessment, France's Christine Lagarde saying that while there were no "milestones at this stage," they had held "very good discussions" within the context of "an overall package."