Berlin seeks enforcement powers over Greece on budget policy

Mon, Jan 30, 2012, 00:00

GERMANY HAS confirmed it wants an EU-appointed “budget commissioner” sent to Greece with powers to override its government’s budget policy.

Berlin’s demand would also apply to Ireland and any other bailout recipient that consistently missed the targets set out in its rescue plans, a well-placed European source said yesterday.

The source recognised that Ireland’s bailout was on track but said Berlin was anxious to avoid any repeat of the Greek situation, where the authorities have repeatedly failed to implement promised reforms.

Greece is resisting the pressure from Germany. “Anyone who puts a nation before the dilemma of ‘economic assistance or national dignity’ ignores some key historical lessons,” said finance minister Evangelos Venizelos.

The prospect of an Irish referendum to endorse Europe’s new fiscal treaty hangs in the balance as EU leaders make a final push today for a pact to toughen the enforcement of budget rules.

The core aim of EU leaders today is to conclude a two-month negotiation of their new fiscal pact. While there is some confidence in Dublin that the individual terms of the draft agreement may not require a plebiscite, serious uncertainty remains as to whether a vote would be needed to endorse the overall package.

EU leaders resolved last month to pursue an international treaty, operating outside the framework of European law, after British prime minister David Cameron vetoed a new EU treaty. Most of the text is agreed, although non-euro Poland is still insisting on the right to attend summits of euro zone leaders.

At issue now for the Government is the principle of adopting an international treaty, which will impose binding obligations on the Dáil and Seanad, without the consent of the people. Even if the Cabinet decides in the light of the Attorney General’s advice that no referendum is required, this question is considered likely to feature in any Supreme Court challenge.

Such a challenge is considered inevitable at this point, meaning the final decision on a referendum will be in the hands of the court.

The Government fears defeat in any vote and its objective in treaty talks was to ensure a referendum would not be required. Senior Irish sources are confident the core of the final draft, agreed on Friday, will emerge unchanged today.

Crucial from the Government’s perspective is Germany’s decision to tone down its demand for constitutional limits on debt and budget deficits. As it now stands, the text calls for a “preferably constitutional” basis for such limits, leaving scope for Dublin to enact the measures in secondary legislation.

“It’s a fine call but, on balance, we’re okay,” said one Irish official of the referendum question.

But in public the Government has insisted no decision on a referendum can be made until the Attorney General completes her assessment.

Yesterday, Minister of State for European Affairs Lucinda Creighton said it would be about two weeks before it is known if a referendum needs to be held. “We won’t have advice from the Attorney General probably for a couple of weeks,” she said. “We have to agree the text first and she needs the opportunity to scrutinise it, analyse it and come to her own informed view.”