Italian presidency tries to appease Britain by scrapping notion of reform contracts

BRUSSELS - The Italian EU presidency has said that the contentious idea of 'reform contracts' is no longer being considered but most of its current work is taken up with trying to resolve the British budget problem.

Stefano Sannino, Italy’s EU ambassador, told journalists on Monday (3 November) that the Germany-pushed idea under which member states make reforms in return for solidarity is "off the table”.

“We have to get out of the view that something is a condition to get something else."

He takes pride in Italy’s role in moving the debate to one on investment-focused economic policy for the EU, steering away from the austerity drive of the previous years.

He spoke of an "ideal" situation in which by December it would be clear what the EU still needs to do in terms of economic coordination, more competitiveness and budget consolidation, but also come up with an "investment plan" needed to boost demand in Europe.

"If you bring all these elements together, you have a definition of a new economic policy for Europe, not focused on only one aspect," Sannino said.

But it will be tough work getting there. He noted that the new European Council president will only take office on 1 December, while the EU summit where a new economic policy is supposed to be elaborated will take place on 18-19 December.

“There is not much time left and we'll have to work with transition teams," Sannino said.

For the moment however, the thorniest issue is finding a compromise with Britain on its €2.1bn surcharge for the EU, which came to light after the UK reported a higher gross national income over the past 20 years.

British PM David Cameron has pledged not to pay by the 1 December deadline.

"A solution is still in the making, but we are all working hard, together with the European Commission," Sannino said, with the issue set to feature at the EU finance ministers meeting on Friday.

He said changes to the EU rules on payments to the budget were "part of the discussion," given that the size of the sum was an "unprecedented event with a significant political impact."

On the other hand, any changes to the rules - which include monthly fines of at least 2.5 percent of the total sum if a country fails to pay on time - should not be seen as arbitrary, just because a country is unwilling to pay.

"We cannot give the impression you have a result you don't like and then change the rules. We are on a very narrow path here," Sannino said.

Timmermans vs. Hungary

Another contentious area for the Italian presidency is the state of democracy and the rule of law in a number of member states, particularly Hungary.

Sannino was careful not to single out Budapest when talking about plans to come up with a way of taking the pulse of democracy in member states.

"I don't want this to be seen as an initiative against one or two member states. We are trying to look at it in a much more horizontal way,” he said, adding that EU affairs ministers will discuss the issue on 18 November.

He also noted that the EU commissioner in charge, Frans Timmermans i, was one of the EU foreign ministers who last year signed a protest letter against the actions of the Hungarian government.

Hungary has meanwhile become the only EU country to have six senior officials banned from entering the US, due to corruption allegations.