Only 9 Nations Will Be Needed To Ratify Europe’s Fiscal Treaty

12/17/2011 09:48

NYTimes:  BRUSSELS — A new treaty to impose tighter discipline among the 17 nations in the European Union that use the euro will come into force once nine countries approve it, according to a draft released Friday. That potentially reduces the threat that disapproval by one nation could scuttle the pact.

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The treaty is intended to help improve confidence in the euro by tightening the coordination of the 17 euro zone economies, requiring nations to balance their budgets and cut debt.

The outline of the plan was agreed to by most European leaders a week ago, with the exception of Britain. European officials hope to reach agreement on the eight-page draft of the treaty within weeks, with Britain being offered observer status in discussions.

The treaty will enter into force “on the first day of the month following the deposit of the ninth instrument of ratification by a contracting party whose currency is the euro,” the draft states.

That means that if one country held a referendum on the treaty and did not approve it, the decision would not block others from putting it in place once nine other nations ratified it. The terms of the treaty will, however, apply to each country only when the country ratifies it.

If a euro nation fails to ratify the treaty, it would be in an “uncomfortable position” politically, said one European official who spoke on condition of anonymity.

The draft makes it clear that countries outside the euro will not be forced to abide by the treaty before joining the currency alliance, but they can opt to do so.

That makes the treaty easy for most of the nations not using the euro to accept, said one diplomat from a country not using the currency who spoke anonymously because he was not authorized to speak publicly.

Because the agreement is an intergovernmental one, rather than an amendment of a European Union treaty, any moves to make sanctions easier to impose on nations that break deficit and debt limits are complex.

Under the proposed treaty, nations would agree to abide by tougher rules than those currently laid down in the European Union treaty. If broken, that agreement could not be enforced by the European Court of Justice, though national courts could be able to do so, officials said Friday.

The treaty would require nations to write debt brakes into their national law. Summit meetings of euro zone leaders would take place at least twice a year.

Jean-Claude Juncker of Luxembourg, who leads the group of euro zone finance ministers, said he was confident that Europeans would meet a Dec. 19 deadline for arranging 200 billion euros ($260 billion) in loans to the International Monetary Fund to help bolster emergency financing for vulnerable nations that use the euro. Euro zone countries are expected to provide 150 billion euros ($198 billion), while it was hoped that nations not using the euro would contribute around 50 billion euros ($66 billion).

“Countries have to say within 10 days what’s happening, and we’re collecting this at the moment,” Mr. Juncker said Friday in Luxembourg, according to Bloomberg News. Asked if the European Union would meet this deadline, he said, “I think so.”


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