BRUSSELS (MNI) – As European Union finance ministers gathered in
Brussels to discuss strengthening the bloc’s economic governance, the
European Commission suggested that sanctions for rule breakers should
become automatic.

“The sanctions should be a normal consequence, a quasi-automatic
consequence if the rules are broken,” European Commissioner for Economic
and Monetary Affairs Olli Rehn told reporters as he arrived for the
meeting here on Monday.

“It is like in a football game: it won’t work if the players start
to discuss and argue every time a decision is made.”

The Commission wants sanctions that take effect automatically
unless a majority of countries vote against it, Rehn said. Under the
current system, a majority of countries must vote for the sanctions
before they can be imposed.

Finance ministers from the EU’s 27 countries, together with Rehn
and European Central Bank President Jean-Claude Trichet, are attending a
forum here Monday chaired by European Council President Herman Van
Rompuy.

The task force hopes to propose a new set of ideas aimed at beefing
up EU fiscal rules ahead of a meeting of European Union heads of state
and government on October 28 and 29.

European Union budget rules stipulate that countries should limit
their annual budget deficits to 3% of their GDP and their outstanding
debt to 60% of GDP.

A lackadaisical attitude towards enforcement along with stimulus
spending to counter the financial crisis led to many countries breach
those limits, though in many cases countries were already in violation
of them before the crisis hit. Greece is the worst offender, with a
deficit at the end of last year more than four times the EU limit.

Such high levels, along with correspondingly high debt loads, have
hit investor confidence in countries like Greece, Ireland, Spain and
Portugal, making it more expensive for them to finance their needs in
capital markets.

After bailing out Greece to the tune of E110 billion in May and
establishing a second backstop fund worth E440 billion, Eurozone
policymakers are keen to give the rules more teeth in order to keep a
tighter lid on debt and deficit levels.

Van Rompuy is expected to release a statement on the outcome of
Monday’s meeting at around 1900 GMT.

–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com

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