Poland Favors EU Treaty Change to Rescue Eurozone

Polish PM Donald Tusk (L), whose country holds the EU's rotational presidency, meeting with European Commission President Jose Manuel Barroso in Warsaw December 1. EPA/BGNES

The Polish EU Presidency has stated Tuesday it backs the initiative of German Chancellor Angela Merkel and French President Nicolas Sarkozy to forge new rules to secure the financial stability of the EU.

Poland, who is EU's rotational presiding member state until the end of 2012, will back all efforts to rescue the eurozone, said Polish PM Donald Tusk at a press conference in Warsaw.

"This can be done either by a new EU Treaty, which we favor, or by an intergovernmental agreement, which we view as less effective but quicker," said Tusk.

Monday Merkel and Sarkozy agreed to propose at the European Council Friday radical innovations in the way financial stability in the European Union is safeguarded.

According to the proposal, innovation may come either as amendments to the existing EU Treaties, or in a new agreement among the 17 member states of the eurozone.

The two key EU leaders agreed to propose automatic penalties for countries that exceed European deficit limits, as well as the creation of a monetary fund for Europe.

Merkel and Sarkozy also said they would prefer the treaty changes to be agreed upon by all 27 EU countries, but that they may consider a smaller number of countries to go ahead with the changes.

Amendments are expected to run along 4 main lines: stricter requirements for fiscal discipline to be embedded in amendments to EU Treaties; a boosting of the current bailout fund, the European Financial Stability Facility, to 2-3 times its current balance; a tranche of money from the IMF to augment the bailout fund; and a political mandate for the European Central Bank to keep buying debt from Italy and Spain.

In the meanwhile, Standard & Poor's announced intentions to carry out a mass downgrade of the credit ratings of eurozone countries, a move that Merkel and Sarkozy denonounced as tactless.