Berlin: A summit of the heads of state and
government of the European Union will begin in Brussels on Thursday, amid row over a plan to amend a part of the EU`s Lisbon Treaty so as to prevent debt crisis.
Germany and France have been demanding changes to the
treaty, including new sanctions on member-nations violating
the limits on budgetary deficit and debts set by the Growth
and Stability Pact to prevent a repeat of Greek debt crisis.
German Chancellor Angela Merkel on Wednesday vowed to
fight for making changes in the treaty to punish those nations
endangering the stability of the euro, by exceeding the
maximum budgetary deficit of 3 per cent of the GDP and debt
level of 60 per cent of the GDP. These are the maximum limits
allowed under the pact.
She wanted the treaty to be amended to include tough
sanctions against rule-breakers, such as scrapping the voting
rights and imposing fines. Merkel has also called for creating
a permanent financial shield to protect euro zone nations in
the future from liquidity crisis.
"The new crisis prevention mechanism must be legally
unassailable and that will be possible only with an amendment
of the European treaty," Merkel said in a policy statement
before the Bundestag, the lower house of parliament.
She defended her demands for tightening rules of the
Growth and Stability Pact and argued that the present
protective shield for the euro area cannot be sustained for a
Moreover, it "sends a wrong signal to the financial
markets and EU member nations and creates a dangerous trend of expectations" that debt-ridden nations would somehow be bailed out by their EU partners, she said.
A change of the Lisbon Treaty is vehemently opposed by
smaller EU member nations such as Luxembourg, Belgium and the Czech Republic, which fear that it could lead to several years of negotiations as well long delays in ratification by
It took eight years for the EU to negotiate the Lisbon
Treaty and as the last member nation, the Czech republic
ratified the treaty at the end of 2009. A change to the treaty
requires the approval of national parliaments in all 27 member
In the wake of Greek debt crisis earlier this year, euro
zone nations along with the IMF had established in a 750
billion-euro (nearly a USD 1 trillion) fund to prevent the
turmoil from spreading to other heavily indebted member
nations such as Spain, Portugal and Ireland.
Euro zone nations also rescued Greece from bankruptcy by
extending a 110 billion-euro bailout package.
Germany contributes the lion`s share of the USD
750-billion fund as well as the bailout package for Greece.
Merkel would want to prevent similar crisis in the future
by stripping the voting rights of euro zone nations repeatedly
violating the stability criteria.
She has also urged the EU to work out a debt rescheduling
system in which private banks would write off a part of the
debt, owed by financially troubled states.
"It is not necessary that always the taxpayers have to
step in to rescue a state from bankruptcy, but first of all it
should be the responsibility of private banks which in the
past made big gains" from the troubles of some states, she
Merkel also defended last week`s compromise with French
President Nicolas Sarkozy, in which she gave up her demand for automatic sanctions on rule-breakers in return for French
support for amending parts of the Lisbon Treaty.
"It is true that an agreement between Germany and France
is not everything in Europe. But, it is also true that nothing
will happen without an agreement between Germany and France.
That applies also in this case," she said.