- Title: BELGIUM: EU finance ministers ready for sanctions for budget rule breakers
- Date: 22nd May 2010
- Summary: (SOUNDBITE) (French) CHRISTINE LAGARDE, FRENCH FINANCE MINISTER, SAYING: ''All the participants went along with my proposal, that is we have to focus on short term decisions, that is to say the ones that can be put in place rapidly either because they are legally easy to set up or because they emerged from a general consensus and will be efficient.'' CAMERAMAN FILMING SCHAEUBLE AND LAGARDE (SOUNDBITE) (German) GERMAN FINANCE MINISTER, WOLFGANG SCHAEUBLE, SAYING: ''The things we can do fast, in the framework of the current treaties, we will look to do those quickly. (In the future) we will discuss even issues which may require an amendment of the (EU) treaties. First, though, we will do what we can do without treaty changes and we will do that independently. We will be very pragmatic and goal oriented." LAGARDE ADDRESSING JOURNALISTS (SOUNDBITE) (French and English) CHRISTINE LAGARDE, FRENCH FINANCE MINISTER, SAYING: ''You know, I had an old boss who used to tell me, after a good performance, he used to tell me: would you like a lot of pride or a little bit of money?'' PHOTOGRAPHER LAGARDE LEAVING EUROPEAN CENTRAL BANK PRESIDENT JEAN-CLAUDE TRICHET LEAVING SCHAEUBLE LEAVING
- Embargoed: 6th June 2010 12:25
- Location: Belgium
- Country: Belgium
- Topics: European Union,Finance
- Reuters ID: LVADH8BXN6PJ07887SFRAPK20ZG7
- Aspect Ratio: 4:3
- Story Text: EU finance ministers agree on the principle of tougher sanctions against EU rule breakers and the need to act with urgency.
EU Council President Herman Van Rompuy convened the first meeting on Friday (May 21) of a 'taskforce' of EU finance ministers to discuss budget consolidation and economic governance in the European Union.
The ministers, who met in Brussels, broadly supported calls for new and tougher sanctions against countries that break EU budget rules in a move to shore up the euro and guard against a debt meltdown.
They discussed changes to the way the 27-nation bloc manages public finances and co-ordinates economic policy as investors drop the euro, pushing the common currency down 6 percent this month.
"We discussed sanctions and I could say that one of the conclusions of our debate was that it is very clear that there was a broad consensus on the principles of having sanctions, financial sanctions and non-financial sanctions," Van Rompuy told a news conference.
The ministers' discussions, which will continue until October, were based on last week's proposals from the executive European Commission and ideas from Germany which wants to go further than the EU executive arm.
Both sets of proposals call for swifter and broader sanctions for countries that repeatedly break the EU's deficit limit of 3 percent of GDP.
Both also call for mechanisms to make countries bring their debt levels below the EU ceiling of 60 percent of GDP.
One of the proposals of Germany, where public opinion has been angered by emergency loans to Greece which for years broke EU budget rules and manipulated statistics to hide it, was to create a mechanism for an orderly sovereign default.
French Finance Minister, Christine Lagarde, also came with a proposal: to act with urgency and put aside debate about the eventual need to reform EU treaties.
''We have to focus on short term decisions, that is to say the ones that can be put in place rapidly either because they are legally easy to set up or because they emerged from a general consensus and will be efficient,'' Lagarde said.
German finance minister, Wolfgang Schaeuble, shared the same sense of urgency. ''(In the future) we will discuss even issues which may require an amendment of the (EU) treaties. First, though, we will do what we can do without treaty changes and we will do that independently. We will be very pragmatic and goal oriented," he said.
Possible sanction against excessive budget deficit includes the temporary suspension of a country's voting right within the EU economic Council, EU officials said. This would require amendments to the EU treaties.
As for her thought about what makes an effective sanction, Lagarde joked: ''You know, I had an old boss who used to tell me, after a good performance: would you like a lot of pride or a little bit of money?'' EU governments are trying to regain investors' confidence after months of turmoil that have pushed many euro zone member states' borrowing costs sky high, led to a 110 billion euro ($138.4 million) bailout of Greece and the setting up of a $1 trillion safety net to try to prevent the contagion spreading.
The debt crisis has provoked huge instability in the 11-year-old euro currency, shared by 16 countries, and led to demands for EU states to work much harder on co-ordinating their economic policies and bring their finances in check.
EU finance ministers, or their representatives, will meet twice more before June 17 and prepare a progress report for a summit of EU leaders. The conclusions of the talks will be presented to an EU summit in October.
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