EUROPEAN COMMISSION president José Manuel Barroso says the future of the European project is at stake as EU leaders debate measures to toughen its budget rules.
Casting the discussion on the union’s economic governance in historic and moral terms, Mr Barroso said the commission would advance legislative proposals in early September to strengthen the rule book.
The proposal will be published the month before a group, chaired by European Council president Herman Van Rompuy, finalises its own governance plan – an apparent reflection of the commission’s concern to avoid any undercutting of its right to initiate EU law.
Mr Barroso was addressing the European Parliament yesterday at its monthly plenary session. MEPs are discussing plans for the EU’s new diplomatic service and proposals to introduce pan-European regulators to oversee banks, insurance firms and financial markets.
At the same session on Monday night, EU economics commissioner Olli Rehn suggested that the EU’s €500 billion rescue net for distressed euro countries could be deployed as a second line of defence to help countries to prop up their banks.
In his question-and-answer session with MEPs, Mr Barroso said it was important the commission, the parliament and the council of EU governments worked “consistently and in a spirit of close co-operation” to approve the new governance proposals.
“What is at stake is the future of the euro and you could say to some extent the future of our European project,” he said.
The new rules include quasi-automatic financial sanctions against governments who break EU budget and debt limits, to be applied soon after any breach.
The sanctions would include the suspension of payments from the EU budget, and economic surveillance would be increased to take account of house prices, labour costs and other economic indicators. Under the same plan governments would submit draft budgets to Brussels before national parliaments, something most have agreed to do.
Mr Barroso said the proposed reforms had a “historic dimension”, adding that euro countries had special responsibilities.
“Those member states share a common good called the euro and it would not be acceptable that the misbehaviour of some members would put at risk all the others.” MEPs are set to vote tomorrow to establish the European External Action Service, as the diplomatic corps will be known.
With MEPs and EU governments still divided over the powers of new EU financial regulators, a vote on the “legislative resolution” on the new supervisors has been held over until September.
The manoeuvre followed inconclusive talks which continued in the early hours of yesterday. This leaves scope for both sides to iron out their differences while the legislation remains at first reading stage.
Saying agreement was close, Mr Barroso expressed hope that the new regulators would still be able to begin their work as planned at the beginning of next year.