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EU Summit Clears Way For Treaty Change, Diplomats Say


European Commission President Jose Manuel Barroso (left) and European Council President Herman Van Rompuy speak during a press conference after the EU summit in Brussels early today.
European Union leaders have agreed to new rules aimed at tightening budget discipline and warding off another financial crisis.

The leaders agreed to the new rules at talks in Brussels that dragged into the early hours of today.

They're meant to avert another situation like earlier this year, when Greece's debt crisis shook the eurozone and led EU states to hastily put together a multibillion-euro bailout for Greece and a 440-billion euro safety net for the wider eurozone.

Today's agreement would require the creation of a permanent fund to help out countries in trouble; that national budgets be checked by the EU; and that progressive sanctions be instituted on states that do not keep deficits and debt in check.

"Compared to the current situation," European Council President Herman Van Rompuy told a press conference, "sanctions [on states that do not keep deficits in check] will kick in earlier and progressively. Public debt will be taken more into account alongside the deficit criteria. Sanctions will be possible before the 3-percent annual deficit is reached if not enough preventive action is taken."

Changes had been pushed by EU heavyweights Germany and France.

Germany, after all, contributes most to the 110-billion-euro Greek bailout and the 440-billion-euro safety net for the whole 16-nation eurozone.

'Limited Change'

Berlin argued that any permanent arrangement would require some limited rewording the EU's Lisbon Treaty because the bloc's basic charter currently stipulates no EU country can bail out another.

"Everybody agreed that there must be a permanent crisis mechanism, and everybody agreed that this must be formed by the member states," German Chancellor Angela Merkel told journalists. "Everybody therefore agreed that this will require a limited change to [the Lisbon Treaty]."

Diplomats said some member states signed on reluctantly to even limited changes to the treaty.

The prospect of reopening the Lisbon Treaty is unappealing, not least because it took years to negotiate and only came into force 11 months ago.

But Van Rompuy said the treaty would not face wholesale changes.

"It's not about reopening the Lisbon Treaty or to have a new institutional debate, no," Van Rompuy said. "You have to meet the need to have a permanent crisis mechanism and this is the wish of everyone and so you need a constitutional basis, a more effective basis in the treaty.''

Still, even agreeing a slight change could be a complicated task.

Changes have to be approved unanimously and ratified by all member states, either in a parliamentary vote or a national referendum.

It is now up to Van Rompuy to prepare draft changes to the treaty -- and find out if there's any way to avoid the need for national referendums. Leaders will then discuss the proposals at their December summit, with the aim of agreeing changes by mid-2013, when the temporary emergency fund set up in May expires.

Also in December, leaders will return to another German proposal -- that voting rights for repeat debt-and-deficit offenders be suspended.

written by Kathleen Moore, with agency reports
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