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EU rumbling over German-French fiscal discipline push

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EU rumbling over German-French fiscal discipline push
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EU leaders are on edge over the prospect of a full-blown political shoving match when they gather for a summit this Thursday. Germany’s Chancellor Angela Merkel and France’s President Nicolas Sarkozy have upset many of their partners with a call for EU treaty changes to enforce fiscal discipline.

Particularly alarming to some is Berlin’s demand to make it possible to suspend the voting rights of states which seriously violate key principles.

European Council President Herman Van Rompuy says his role is to find consensus amid
the member states’ varying positions.

Eurogroup chief Jean-Claude Juncker, also Luxembourg’s prime minister, said the Franco-German deal over reform of the EU’s budget rules was unacceptable.

European Justice Commissioner Viviane Reding (also of Luxembourg) said that reopening the Lisbon Treaty would be irresponsible.

Germany wants limited amendments to the treaty to allow for a permanent system to handle sovereign debt crises in countries that use the euro.

Merkel has threatened to block other reforms if no deal is reached on treaty alterations.

She did, however, bow to French demands to allow some political discretion over sanctions for deficit and debt deviants.

Analyst Daniel Gros, with the Centre for European Policy Studies, said: “It is very likely that other governments will see that the Germans have a point. Right now we do not have a procedure for restructuring the debt of a country in really big difficulties.”

At this Thursday and Friday’s talks in Brussels, EU leaders are expected to approve an agreement by a task force of finance ministers to impose sanctions on member states that violate budget deficit and debt limits.