European Council President: EU should be allowed to demand changes to national budgets

BRUSSELS – Top European officials have called for countries that use the euro to grant an international authority the power to demand changes to their national budgets, as part of a grand vision to save the currency and strengthen the union.

The plan published Tuesday on the European Council website was drawn up by the “gang of four” European presidents: Council President Herman Van Rompuy, European Commission President Jose Manuel Barroso, Eurogroup President Jean-Claude Juncker and European Central Bank President Mario Draghi.

The four officials’ proposal appears aimed at encouraging Germany to accept closer fiscal integration, such as jointly issued eurobonds, which spread debt risk across the eurozone and would lower the risk of individual states needing a bailout. Germany opposes a quick adoption of eurobonds because it would be exposed Berlin to more potential costs and reduce incentives for weaker states to fix their finances.

A central control over those finance policies may reduce Germany’s fears.

“Greater pooling of decision-making on budgets…(and) effective mechanisms to prevent and correct unsustainable fiscal policies in each member state are essential,” they wrote in the report to be debated at a summit of EU leaders Thursday and Friday.

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