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EU targets solidarity deals in 2014

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(BRUSSELS) - EU leaders are aiming at reaching a deal next year on providing eurozone states funds to boost jobs and growth, but the money would be tied to contracts similar to bailout agreements.

According to a draft of the conclusions of next week's summit, EU leaders are aiming to agree at their March 20-21 summit that European states could conclude voluntary contracts with the Commission to conduct reforms and "associated solidarity mechanisms" to financially help implement them.

Since the beginning of the eurozone debt crisis there has been a debate between the states which share the euro over austerity and solidarity -- where the obligations to make difficult reforms should be matched with help from European partners.

The idea of making voluntary contractual arrangements to match reforms and aid was first raised in 2012, but decisions have regularly been put off due to divisions between European countries.

According to the draft of the conclusions of the December 19-20 EU summit, leaders are looking at having member states develop their own proposals for reforms.

The proposals could "cover a broad range of growth and job-enhancing policies and measures, including the performance of labour and product markets, the efficiency of the public sector, as well as research and innovation, education and vocational training," according to the draft text.

The EU's executive Commission and the European Council would decide on the proposals, and the Commission would monitor implementation under its newly expanded powers over the finances of member states.

EU leaders will task the Commission and European Council President Herman Van Rompuy "to further explore all options regarding the exact nature (loans, grants, guarantees), institutional form and volume of support".

France, Italy and Spain have been the leading proponents of greater common support mechanisms for eurozone states, while Germany has been wary of taking on open-ended financial obligations.

The original idea of contracts was paired with creating an some form of central budget for eurozone states, but Germany opposed this and there is no mention of such a capacity in the latest proposal.

The text specifies the assistance should not entail financial obligations for other countries and that the contracts are not to become a tool for income equalisation in the EU.

EU bailouts are also based on contracts, with states required to meet fiscal targets to receive rescue loan funds.

European Council, 19-20 December 2013


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