European plan tries to convince Germany to do more

It aims to centralize some control to aid ailing debtor nations

By Toby Sterling and Don Melvin

Associated Press

Published: Tuesday, June 26 2012 8:55 p.m. MDT

Analysts were skeptical that the "gang of four" plan would lead to a concrete plan at the summit.

"Such proposals are just bureaucratic fine-tuning, rather than game-changing policies that will result in debt mutualization and a banking Union," said analyst Neil MacKinnon of VTB Capital.

"As a result, the EU Summit will likely produce rehashed plans for closer fiscal integration and a banking union but without any substantive detail of how it will actually be put into practice."

Though many European citizens will be opposed to the idea of surrendering control over their budgets, their governments all agreed to abide by a 3 percent deficit limit when they joined the single currency.

After multiple violations of the limit — by Germany and France in the early 2000s, by a host of countries in the wake of the 2008 financial crisis and by Greece the whole time — the 3 percent limit was reaffirmed in a new pact signed in January but not yet ratified. That pact also obliges eurozone countries to submit preliminary budgets to Brussels each year.

The latest plan published Tuesday was short on detail, but appeared to propose an even closer oversight of national budgets: "upper limits on the annual budget balance and on government debt levels of individual member states could be agreed in common," it said. Then, a "euro area level" authority could "require changes" to budgets of countries that stray.

At the end of the report, Van Rompuy volunteered to develop a "specific and time-bound roadmap for the achievement of the genuine economic and monetary union" by December.

Greek government hit by another resignation

ATHENS, Greece — Can there be one day without bad news for the new Greek government?

Perhaps, but not Tuesday. The coalition government suffered another setback as a second Cabinet member quit in two days over what critics called a conflict of interest.

The departure of Giorgos Vernicos was not in itself a major blow — he was the deputy at the merchant marine ministry — but it was the latest in a litany of missteps and bad luck that have halted the government's ability to regain control of Greece's austerity program.

Prime Minister Antonis Samaras' new conservative-led government was sworn in last week, ending months of political deadlock. But in the last week alone, it has suffered a string of major problems.

The designated finance minister resigned Monday. Samaras himself is recovering at home from a serious eye operation. The two health problems delayed a visit to Athens by international debt inspectors, which in turn delayed their report on Greek debt for EU leaders.

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