* Document backs "differentiated fiscal consolidation"
* EU leaders to consider calls at June 26/27 summit
* Few specifics in draft proposals
* Italy: EU rules allow flexibility in return for reforms
* Italy also seeks help with Mediterranean migrant crisis
(Adds Italian, Dutch economy ministers, detail on EU budget
By Giselda Vagnoni and Francesco Guarascio
BRUSSELS/ROME, June 23 European leaders will
consider calls to interpret EU budget rules with more emphasis
on economic growth, according to the draft conclusions of a
direction-setting summit in Brussels this week.
The document drafted by European Council President Herman
Van Rompuy in consultation with Italy, the next country to hold
the rotating EU presidency, marks an effort to reset the EU
agenda away from the budget cuts and tax squeezes that
characterised the initial reaction to the euro zone debt crisis.
With much of Europe still struggling to return to
sustainable growth and with unemployment rates at record levels
in many areas, pressure for a change of course was underlined by
a surge in support for anti-EU parties in last month's European
The draft, which could still change before the summit on
Thursday and Friday, calls for steps to create growth and jobs
and to support deeper reform by individual member states.
However it does not call for a change to the rules set in EU
fiscal pacts and contains few specifics.
"Given the persistently high levels of public debt,
growth-friendly and differentiated fiscal consolidation must be
continued," the document says.
"Recovery remains fragile and uneven and efforts must
continue and be enhanced in order to strengthen Europe's
capacity to grow and create jobs," it says.
The conclusions are regular statements of the outcome of EU
summits. The leaders are also expected to adopt a separate
Strategy Agenda for the EU for the next five years and nominate
former Luxembourg Prime Minister Jean-Claude Juncker as the next
president of the European Commission on Friday.
The economic proposals form part of a wider deal under which
centre-left leaders agreed to support Juncker in exchange for
policy agreements on growth and jobs.
Germany, long opposed to any relaxation of the EU rules
which limit budget deficits to 3 percent of gross domestic
product and bind member states to a steady reduction in the
public debt, has not openly opposed calls for more flexibility
but says the rules must be respected.
"The Stability and Growth pact includes the possibility of a
flexible application in individual cases," a German government
spokesman told reporters in Berlin.
Italian Prime Minister Matteo Renzi, strengthened by a
triumphant result in last month's European election, has been
one of the main promoters of greater budget flexibility in the
EU, to complement his pledges for structural reforms at home.
Renzi's Economy Minister Pier Carlo Padoan and his Dutch
counterpart Henk Kamp met in Rome on Monday and said in a
statement they both saw "the need to put growth and jobs at the
top of the agenda".
Renzi's undersecretary in charge of European affairs, Sandro
Gozi, told reporters there was "very wide support for our
priorities and our methods," as Italy assumes the EU presidency.
The details of what calls for flexibility might mean in
practice have remained sketchy but Italy has in the past sought
to have spending on infrastructure investment and research
excluded from deficit calculations. It has also sought to win
more time to bring its structural budget deficit, adjusted for
the effects of the business cycle, into balance.
Italian officials refer to a clause in existing EU rules
which already allows for the possibility of temporary deviation
from countries' agreed budget goals, especially if there has
been "implementation of major structural reforms which have
direct long-term positive budgetary effects, including by
raising potential sustainable growth, and therefore a verifiable
impact on the long-term sustainability of public finances."
An EU official told Reuters that the key word in this clause
is "implementation," meaning that reforms must be carried out
and applied, not merely announced.
This suggests the political negotiations for Renzi, who took
office in February, may not be straightforward. He has an
ambitious agenda but little of it has been implemented so far.
The discussion has played into horse-trading over roles in
the next European Commission, with Britain accusing Juncker of
being too inclined to concentrate power in Brussels.
British Prime Minister David Cameron told European Council
President Herman Van Rompuy in London that he would demand an
unprecedented vote among EU leaders to press his opposition to
the appointment but he has few, if any, allies.
Renzi initially expressed some scepticism over Juncker but
at a meeting at the weekend with other centre-left leaders he
agreed to support his candidacy in exchange for a new approach
to budget policy.
Gozi also said Italy would secure a "heavyweight"
representative on the new Commission which will be appointed
later this year.
Renzi, a longstanding critic of rigid EU deficit rules, was
a rare exception among government leaders in the EU poll,
winning 40.8 percent of the Italian vote, the best result for
any Italian leader since the 1950s.
The draft summit document also calls on the bloc as a whole
to assume more responsibility for the southern Mediterranean
migrant crisis faced mainly by Italy, Malta, Greece and Spain
and to step up measures to ensure energy security.
(Additional reporting by Gernot Heller in Berlin; Writing by
James Mackenzie and Gavin Jones; Editing by Ruth Pitchford)