Europe leaders agree to budget controls

Twenty-five European Union governments agreed on a fiscal pact requiring strict budget discipline in the eurozone, days ahead of an expected Greek debt deal. All 27 EU leaders agreed to create a permanent eurozone rescue fund, officials said. The Monday night announcement, which German Chancellor Angela Merkel called historic, empowers Europe's Court of Justice, the highest EU court, for the first time to be the enforcer of eurozone fiscal integrity. It imposes quasi-automatic fines against countries that persistently breach new EU budget-deficit rules and obliges all eurozone countries to introduce binding legislation or constitutional amendments abolishing governments' rights to run up excessive levels of national debt. "The debt brakes will be binding and valid forever," said Merkel, who insisted on the strict budget controls. "Never will you be able to change them through a parliamentary majority." Britain and the Czech Republic refused to go along with the accord, expected to be signed in March. "We are not signing this treaty. We are not ratifying it. And it places no obligations on the [United Kingdom]," British Prime Minister David Cameron said, asserting it was in Britain's "national interest" that the 17 EU member states that use the euro as their common currency "get on and sort out the mess that is the euro." Czech Republic officials said they were unsure such a treaty could be approved in Parliament and courts. Britain and the Czech Republic are among 10 EU members that do not use the euro as their currency. The EU leaders agreed the eurozone's $660 billion permanent rescue fund -- known as the European Stability Mechanism, replacing the temporary European Financial Stability Facility and European Financial Stabilization Mechanism -- would likely be in place and operational by July to support heavily indebted states, officials said. The July date is a year earlier than initially planned. French President Nicolas Sarkozy told a news conference he expected a "definitive agreement" to be worked out "in the next few days" on reducing Greece's $272 billion debt to private bondholders by 60 percent. The deal would free the EU and International Monetary Fund to sign off on a further $172 billion bailout of the all-but-bankrupt country. European Council President Herman Van Rompuy said a deal was needed this week for Greece to avoid default in mid-March when it faces huge bond repayments.