Brussels, 9 December 2011 – The European Council , which wound up a summit today in Brussels, adopted a number of significant decisions for strengthening the financial discipline of the Eurozone and for thereby raising confidence in the euro area.
By setting the goal of building a stronger economic union, the leaders agreed on one hand in a new fiscal compact and stronger coordination of economic policy, while providing “stabilization tools” to resolve the most urgent problems.
“I am glad that the new fiscal agreement will require the government sector budgets of member states to be balanced or have a surplus,” said Estonian Prime Minister Andrus Ansip. “This has always been Estonia’s financial policy principle.”
This requirement must also be incorporated into the national legal systems of member states at a constitutional or equivalent level and the European Court of Justice is to be given the power to supervise the transposition.
“Although for Estonia a balanced budget has been the norm even without special legislation, we are not against enshrining this principle in the constitutions of the member states,” Ansip said. “The most important thing is that the Eurozone and the European Union grow stronger as a result. It is in Estonia’s direct interests.”
The goal of strengthening budgetary discipline is also served by the Council’s decision to increase the stringency of the rules on excessive budget deficits. The compact states that should a member state be considered by the European Commission to have violated the 3 percent level, automatic monetary sanctions ensue.
“Estonia supports steps designed in essence to discipline states whose irresponsible fiscal policy behaviour harms the entire Eurozone,” said Ansip.
The political leaders of the Eurozone also were unanimous in agreeing that stabilization funds would have to be urgently strengthened in order to ease the tensions currently being seen on money markets. For this reason, they decided to speed up entry of the European Stability Mechanism. The agreement will enter into force as soon as it has been ratified by member states representing 90% of the capital obligations. The objective set was for the ESM to enter into force in July 2012.
To ensure International Monetary Fund has adequate resources for resolving the crisis, the member states affirmed their intention to allocate to the IMF additional funds in the form of bilateral loans of up to 200 billion euros.
The leaders of the Eurozone stated that the implementation of the measures requires amendments to the treaties of the European Union. Considering the lack of consensus among the EU member states, it was decided that these would enter into force by intergovernmental agreement to be signed by March. The final goal is to introduce the necessary amendments into the basic treaty of the Union as soon as possible.
“We did not succeed in achieving an agreement between 27 member states, but much more important is the fact that we avoided the worst – a rift between the Eurozone and the rest of the member states,” said Ansip.
The signing of an accession agreement with Croatia on Friday morning provided a more festive aspect of the European Council meeting. Croatia will become the 28th member state of the EU on 1 July 2013.
For the statement of the heads of state and government of the Eurozone and conclusions of the European Council, visit the official page of the European Council, http://www.european-council.europa.eu/home-page?lang=et