BRUSSELS (AFP) - The European Union wrestled with proposals to overhaul its ineffective budget rules but put off concrete action until January at the earliest in the face of big divisions.
At talks here, EU finance ministers also grappled with embarrassing revelations that Greece joined the eurozone in 2001 using bogus economic data.
The meeting of all 25 EU nations was held after eurozone finance ministers late Monday expressed their disquiet at "excess volatility" on currency markets, with the euro hovering near record highs against the dollar.
The debate about reforms to the EU's Stability and Growth Pact, which has been left in tatters by the refusal of countries including France and Germany to obey its deficit ceiling, did achieve some progress, officials said.
"We had a good exchange of views and some convergence seems to have appeared," Dutch Finance Minister Gerrit Zalm, whose country holds the rotating EU presidency, told a news conference.
But he added: "We need several months to arrive at a consensus."
EU economic and monetary affairs commissioner Joaquin Almunia said he hoped that "in January we will have a clearer overview".
The 1997 pact requires eurozone nations to hold their public deficit to less than 3.0 percent of gross domestic product (GDP), a threshold that France, Germany and several other countries have failed to honour.
Almunia, while insisting on the need for budgetary rigour, has put forward ideas to make the pact more flexible by, for instance, relaxing an "exceptional circumstances" clause in which countries can breach the deficit ceiling.
There is also talk that rather than annual targets, eurozone nations should evaluate their finances over the economic cycle to take account of good times as well as bad, to encourage investment, and to focus more on debt levels.
The debate "is moving in the direction of policies which we have supported since 1997", British finance minister Gordon Brown said.
While Britain is outside the eurozone, Brown has argued that the EU should adopt his own "golden rule" to allow national finances to sink into the red over the economic cycle provide that borrowing is ploughed into investment.
France and Germany went further at the EU talks by arguing that spending for research and development, as well as for "productive investments", should be stripped from deficit calculations.
That received short shrift from the rest of the EU, while the proposal to focus on EU countries' debt as well as deficit levels also received a knockback from Italy, the most heavily indebted country in the EU.
"Countries with low debt (levels) are enthusiastic about the debt criterion. Of course I cannot answer for my Italian colleague, but if I were to gamble on his motives, it would be because Italy has a high debt," Zalm said drily.
Greece meanwhile was upbraided at the EU meeting after drastic revisions showed its budget deficit has been far in excess of the 3.0 percent limit all the way back to 1997.
"It is of paramount importance that the Greek government comply fully and rapidly with budgetary discipline in support (of) the single currency," the ministers concluded in a statement.
Greece may yet face financial sanctions through the loss of EU structural aid funds. But there is no question of it being kicked out of the eurozone.
The ministers in effect pardoned Greece for its dodgy data, acknowledging "that part of the revisions reflect the uncertainties" in the transition to a new EU methodology for calculating deficits in 2000.
The ministers also debated the EU's long-term finances over 2007-2013, with the commission pressing for a controversial increase in spending and also for a shake-up to how member states contribute to the community pot.
Brown again insisted that Britain's much-cherished rebate on its EU budget contributions "is still fully justified in itself".
11/16/2004 - 17:55 GMT - AFP