PM objects to wording of EU text

Brown objected to the term 'economic government of the European Union'
12 April 2012

Prime Minister Gordon Brown has stepped in to stop Europe's leaders declaring a commitment to an "economic government of the European Union".

Backed by Ireland, Sweden, the Netherlands, Poland, and the European Commission, he told a summit dinner in Brussels that the term was contentious and had to be changed.

The wording was part of a proposed accord on how to bail out the Greek economy and restore stability to the flagging euro currency.

Drawn up by Germany and France, the document set alarm bells ringing in some capitals about the prospect of the EU assuming economic control as part of the drive to talk up the single currency.

It stated: "We commit to promote a strong co-ordination of economic polices in Europe. We consider that the European Council (EU leaders) should become the economic government of the EU and we propose to increase its role in economic surveillance and the definition of the European Union growth strategy."

British officials went into huddles with German and French counterparts, pointing out the sensitivities of the using the term "economic government" - implying lost national sovereignty. It was gently suggested that the word "governance" would be less controversial, because "governance is about the way you do things, but it is not about new institutions or structures".

Mr Brown's spokesman commented later: "There is no question of ceding power to Brussels. This is about better co-ordination of everyone's economic policies in Europe." Commission President Jose Manuel Barroso said the wording now stated that Europe "must improve the economic governance of the European Union".

The agreed statement, primarily for the 16 eurozone member states, but to be formally endorsed by the rest before the summit ends, sets out a mechanism for bailing out the crisis-hit Greek economy if necessary, including a "substantial" contribution from the International Monetary Fund, but the "majority" from eurozone countries who pledge themselves "ready to contribute to coordinated bilateral loans".

The document does not mean the immediate activation of a new bail-out scheme, following German Chancellor Angela Merkel's insistence that Greece should only be bailed out as a last resort, when all other avenues of financing its huge deficit have been exhausted. If and when activated it would involve finding more than £20 billion between the eurozone countries, on a voluntary basis.

Who would agree to stump up how much is not under discussion at this stage, and eurozone countries would be expected to contribute on the basis of their respective capital vested in the European Central Bank. Non-eurozone member state are not expected to contribute.

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