Ministers bespreken hervorming Stabiliteitspact (en)

EUOBSERVER / BRUSSELS - EU finance ministers are bracing themselves for a final showdown on reforming the union's economic rules over the weekend in talks that threaten to drag on into the agenda of the EU leaders' summit next week.

Economics and monetary affairs Commissioner Joaquin Almunia i is "reasonably optimistic" that an accord could be found on Sunday (20 March), according to his spokeswoman, but little appears to have changed since talks broke down in disagreement on 7-8 March.

And Luxembourg's Prime Minister and current head of the EU Jean-Claude Juncker said it would "not be catastrophic" if no agreement is found amongst finance ministers.

Whatever happens between finance ministers, EU leaders will, over dinner on Tuesday (22 March), discuss the Union's Stability and Growth Pact.

This pact sets limit on countries' budget deficits, but has recently effectively been dismantled by France and Germany, who have failed to keep to its rules.

Sticking point

The main sticking point over reforming the pact remains a disagreement over what factors should be taken into account when deciding whether to punish a member state for breaking its rules.

Germany wants the vast cost of reunification to be taken into account, as well as the huge transfers it makes to the EU budget.

France would like to see spending on research and development taken into consideration.

But smaller member states, led by Austria, are concerned that this would result in too great a weakening of the rules and are pushing for greater fiscal discipline.

Austrian Chancellor Wolfgang Schüssel stuck to a firm line in an interview with German business daily Handelsblatt, in which he said, "what we don't need is a list of exceptions with all the national pecularities".

Exasperated by the difficulty of finding agreement on this list, Mr Juncker has hinted this week that the whole list - and maybe even the whole reform - may be scrapped.

"I am not going to sign up to a solution which boils down to an equally poorly functioning pact later on", he said after talks broke down earlier in the month.

No perception of change

And EU diplomats say that not much has substantially changed since the break down of talks. "There isn't any perception of change", said one diplomat, adding, "there is no guarantee of a deal".

Officials have also hinted that an informal deal has been struck between France, the UK, Germany, Italy and Spain to block any moves towards a rigid interpretation of the Pact.

The row threatens to overshadow what was supposed to be the main business of the summit - the EU's economic reform agenda, known as the Lisbon process.