Finnegan's Take

With Greece on the brink, Brussels is dangerously distracted by efforts to invent new European rules and institutions which will help prevent future sovereign debt crises.

After protracted negotiations, MEPs and the European Council – which represents EU Member States – came to an agreement on the so-called “Six Pack” economic governance package.

The deal promises closer surveillance of national budgets, with fines for those in breach of good practice. It’s a souped-up version of the Stability and Growth Pact which, as outgoing ECB chief Jean-Claude Trichet noted recently, was undermined by the refusal of larger countries to accept sanction when their budgets were out of kilter.

The revamped supervision system is in addition to the European Semester introduced earlier this year which sees national finance ministries submit the broad outline of their budgets to the European Commission in the first half of each year.

As if that were not enough, European Council President Herman Van Rompuy is due to present the October EU Summit with still more plans for fiscal integration. This could flesh-out ideas on having something akin to an EU Treasury or even a more powerful European Finance Tsar.

Van Rompuy’s own role and that of Eurogroup chair Jean-Claude Juncker will also be better refined as part of efforts to fill in the gaps left by the architects of the common currency.

One thing is for certain: Irish politicians alluding to the need to get through the EU/IMF programme, in order to emerge from the other end with sovereignty restored, are in for a shock. They (and their electorate) may scarcely recognise Europe’s economic landscape by 2013 – save for the fact that it will resemble life under the Troika.

Whatever about countries like Ireland, Portugal and Greece whose various mistakes left them dependent on the kindness of strangers, the other 24 Member States are growing increasingly unease about enhanced supervision of their budgets.

A degree of IMF-style supervision could soon be a condition of Eurozone membership.

Gary Finnegan writes the EU View column in Business & Finance magazine, a Dublin-based publication

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