European Union leaders signed Friday a treaty designed to force governments to adopt balanced budgets through a “golden rule” or face fines. The Treaty for Stability, Co-ordination and Governance, the bedrock response to a two-year public debt crisis that forced bailouts for Greece, Portugal and Ireland, was signed by 25 of the bloc’s 27 leaders. It “helps prevent a repetition of the sovereign debt crisis,” said EU president Herman Van Rompuy after the ceremonial signing in the EU’s Brussels headquarters.
The economic and monetary union envisaged when the euro currency was introduced in 1999 “is finally walking on two legs,” Van Rompuy said. It will take effect once 12 of the 25 states have ratified the pact. Ireland has already announced plans for a referendum before the treaty can apply there.
If states do not ratify the treaty, they will be blocked from bailout funding from a related rescue firewall being set up as of July this year. In the pact, states that fail to adequately implement the sharpened rules in national law will be dragged before the European Court of Justice. The treaty updates the EU’s Stability and Growth Pact, first agreed in the 1990s and last reformed in 2005.
