BRUSSELS (MNI) – The European Commission on Wednesday softened its
opposition to EU treaty changes to reinforce economic governance in the
Eurozone, as a joint plan for such changes put forward by Germany and
France looked set to eclipse the Commission’s own proposals at the EU
leaders’ summit on Friday.

Concerned that changes to the EU treaty might prove time consuming
and divisive, the Commission presented a plan on November 23 that would
give it sweeping powers to veto national budgets. That plan, officials
said, could be rapidly implemented without treaty changes.

The Commission wants EU leaders to back those measures at the
summit, where it plans to unveil additional governance reforms in
cooperation with the European Council president, Herman Van Rompuy, and
the president of the Eurozone finance ministers, Jean-Claude Juncker.

German Chancellor Angela Merkel and French President Nicolas
Sarkozy, however, are pressing for new economic discipline rules to be
enshrined in the EU treaty. Although their ideas, announced on Monday,
are similar to those of the Commission, the leaders of the Eurozone’s
two biggest economies believe treaty changes are essential to give the
reforms greater legal weight and credibility, and have thrust their
ideas on to the summit’s agenda.

“There is a lot that can be done on the basis of the current
treaty,” said a spokeswoman for the Commission. Nevertheless “treaty
change, perhaps even a two-step change, is something the Commission
would support as a sign of our irreversible commitment to the euro,” she
said, referring to Sarkozy and Merkel’s vow to pursue a treaty among the
17 EU members that use the euro currency, should the EU’s 10 other
member states reject their proposal.

Briefing reporters after a meeting between all EU commissioners,
the spokeswoman said the Commission wanted to see “strong decisions that
allow for the creation of a genuine fiscal compact,” echoing the phrase
used by European Central Bank President Mario Draghi last week in a
speech widely interpreted as signaling his willingness to take further
measures should governments make credible commitments to improve fiscal
and economic governance.

Brussels is also anxious to ensure that any new rules to not
undermine the powers of the existing EU institutions.

“It is [European Commission] president Barroso’s strongly held view
that further steps forward must be taken with no undermining of the role
of the EU Institutions,” she said. “The EU’s institutions are the best
guarantee of the strength and credibility that we need and of
maintaining the coherence between the Eurozone and the EU as a whole.”

— Brussels bureau: +32495228374; pkoh@marketnews.com

[TOPICS: M$$EC$,M$X$$$,MT$$$$,MGX$$$,M$$CR$]