— Countries Could Leave EMU If They Didn’t Want Fiscal Discipline
— Treaty Amendment Could Allow Countries To Be Forced Out Of Eurozone

BEIJING (MNI) – The Dutch government is proposing the creation of a
eurozone budget overlord with broad powers to monitor the fiscal plans
of member states and, as a last resort, force recalcitrant government to
cut spending or increase revenue to ensure their budget deficits comply
with Growth and Stability Pact rules, according to an opinion piece by
Dutch Prime Minister Mark Rutte and Dutch Finance Minister Jan Kees de
Jager published in the Financial Times Thursday.

The plan would also allow countries who did not want to submit to
this budget discipline to leave the eurozone. The officials also propose
a treaty amendment that would allow countries to be expelled from the
single currency area for lack of budget discipline.

The Dutch plan calls for “independent supervision” of compliance
with the budgetary rules through the creation of a “commissioner for
budget discipline.” The powers of that post would be “at least”
comparable to those of the competition commissioner.

“We believe that countries that systematically infringe the rules
must gradually face tougher sanctions and be allowed less freedom in
their budgetary policy,” the Dutch officials argued.

“The new commissioner should be given clear powers to set
requirements for the budgetary policy of countries that run excessive
deficits,” the officials said.

If a nation’s voluntary efforts to reduce its budget deficit prove
insufficient, “the commissioner can force a country to take measures to
put its finances in order, for example by raising additional tax
revenue,” Rutte and de Jager wrote. Additional sanctions — such as
reduced payments from the European Union Cohesion and Structural Funds
— could also be imposed.

As a last resort, a nation’s budget would have to be approved by
the commissioner before it could be presented to parliament. “At this
stage, the member state’s voting rights can also be suspended,” the
officials propose.

“Countries that do not want to submit to this regime can choose to
leave the eurozone,” they stressed. “Whoever wants to be part of the
eurozone must adhere to the agreements and cannot systematically ignore
the rules.”

“In the future, the ultimate sanction can be to force countries to
leave the euro,” the Dutch officials added, noting that this would
require a treaty amendment and so could not be applied at the present
time.

“The measures we are proposing are designed to avoid a situation in
which the ultimate sanction has to be imposed,” they say.

“We must return to the anchors of the eurozone. The rules are still
valid, but all participants must abide by them. If the eurozone is to
survive in its present form as a stable currency union that supports the
internal market and our prosperity, there needs to be radical break with
the past,” Rutte and de Jager wrote.

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