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EU Leaders Sign Treaty On Fiscal Discipline

BRUSSELS -- European Union leaders have signed a new fiscal compact that will require them to keep to a balanced budget.

All the EU states -- with the exception of two -- signed the German-sponsored treaty as they wrapped up a two-day summit in Brussels on March 2.

Euroskeptic Britain has refused to back the new treaty, while the Czech Republic has cited constitutional reasons blocking it from signing.

The new Treaty for Stability, Coordination, and Governance -- nicknamed the "Golden Rule" -- requires the 25 signatory states to take automatic corrective measures in case of overspending.

And it gives the European Court of Justice a role in policing how well states apply the rules.

The new treaty is designed to prevent the 17 countries that use the euro from running up huge debts in order to prevent a repeat of the current crisis afflicting the single currency zone.

Ratification Complications

The treaty will go into force once 12 states have ratified it. The ratification process could prove difficult in some countries, such as Ireland, which will hold a public referendum on the treaty's approval.

Speaking before the signing, European Council President Herman Van Rompuy urged EU heads of government at the meeting to return home and work hard for ratification.

"You now all have to convince your parliaments and voters that this treaty is an important step to bring the euro durably back into to safe waters," he said. "I'm most confident you will succeed, the treaty is short and sharp."

German Chancellor Angela Merkel called the treaty "a milestone in the history of the European Union."

The eurozone's heads of state and government hope the new measures will help them overcome a two-year public debt crisis, which has forced the EU and the International Monetary Fund to bail out Greece, Portugal, and Ireland.

The content of the treaty signed on March 2 was previously agreed upon at an EU summit in January.

With Reuters and dpa reporting
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