Analysis: Merkel, Sarkozy master plan has no new ideas

Mon Dec 5, 2011 3:13pm EST
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By Jan Strupczewski

BRUSSELS (Reuters) - The grand plan outlined by France and Germany on Monday for European treaty change breaks no new ground in terms of ideas -- all the proposals already exist in various legal acts, the only problem is they have never been observed in practice.

If there is one difference it is that France and Germany, the political and economic motors of the euro zone, now want to assemble all the separate pieces of legislation into a single EU treaty. But otherwise, there is little change.

French President Nicolas Sarkozy and German Chancellor Angela Merkel will present their ideas to the rest of the EU at a summit on December 9, and argue that changing the EU's basic law is necessary to prevent a sovereign debt crisis happening again.

But analysts doubt whether elevating pre-existing rules to treaty level will somehow make them tougher, or obeyed.

"This will no doubt build up substantial pressure on member states in the direction of better governance," said Eckart Tuchtfeld, an economist at Commerzbank.

"However, we remain on the skeptical side as it is a willingness to live by the rules that will be decisive. The experience of the last years with the Maastricht Treaty suggests some caution here."

In a joint news conference with Merkel in Paris, Sarkozy said one of their aims was to have automatic sanctions imposed on a country if it breaches the EU rule that a budget deficit should not be bigger than 3 percent of GDP.

Such a rule already exists in the new, revamped Stability and Growth Pact, which will come into force in mid-December, thanks to a large degree to the European Parliament.   Continued...