ECONOMIC GOVERNANCE : DEAL ON TWO PACK' EXPECTED ON 20 FEBRUARY.

The European Parliament, the Irish Presidency and the Commission hope to shake hands, on 20 February, on new rules that would grant the EU executive powers to request a redraft of euro states' budgetary plans in case of "serious non-compliance" with deficit obligations. The mood was hopeful on all sides before three-way talks on twin legislative proposals to boost economic governance, the so-called two pack', started. To break the deadlock, the Commission informally agreed to set up an expert group to analyse the legal feasibility of a European Redemption Fund - to part-mutualise government debt - and short-term eurobills. This should satisfy the demands of the S&D, ALDE and Greens-EFA groups in the EP without alienating the member states.

Over a year ago, in November 2011, the Commission published twin proposals on fiscal discipline for euro countries: one aiming at strengthening economic and budgetary surveillance of member states under market pressure - COM(2011)819 - and one to improve European coordination of national budgetary plans - COM(2011)821. EP and Council have reached an agreement on the former text, where French MEP Jean-Paul Gauzes (EPP) is the draftsman. On the second proposal, where Elisa Ferreira (S&D, Portugal) is the rapporteur, the Socialists, Liberals and Greens request commitments towards establishment of a redemption fund and the issuance of short-term eurobills. There has been a majority in Parliament for a while now on the text as such but this majority refused to tighten budgetary discipline without a solidarity counterpart, explains one source.

The Socialists, Liberals and...