Tensions rise on EU treaty...

Steve Dinneen
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THE EU was yesterday struggling to ensure Franco-German tensions did not threaten a major summit deal
Member states were trying to thrash out changes to the EU treaty to strengthen the bloc’s budget rules to avert new sovereign debt crises.

EU leaders are expected to approve proposals by a task force of finance ministers to impose sanctions on member states that violate budget deficit and debt limits.

But Germany and France, the EU’s dominant powers, have upset many of their partners by reaching a deal independently to push for changes to the bloc’s fundamental treaty, which they say are needed to guarantee long-term fiscal discipline.

“There will be a hot discussion on treaty change,” said a senior EU diplomat. But he added: “We will approve the task force report in the shape it was agreed.”

Germany wants limited amendments to the EU’s Lisbon treaty to allow for a permanent system to handle sovereign debt crises in countries that use the euro and has threatened to block the other reforms if no deal is reached on treaty alterations.

Such an outcome could unsettle financial markets looking for legal certainty and already worried by debt problems in Eurozone countries.