The vote was not without acrimony as centre left and centre right groups were divided on whether the timing was right for a vote.  “The world was a different place when the Commission made its proposals and the Council is also shifting its position on how much austerity is needed”, said Elisa Ferreira (S&D, PT), one of the rapporteurs, said before the vote.

“Changes in the political environment happen all the time.  We should vote because this legislation should enter into force as quickly as possible in view of the persisting crisis” Jean-Paul Gauzes (EPP, FR), the other rapporteur, replied. A slim majority was then secured for the votes to be taken.

Both texts were subsequently adopted with only slim majorities and a decision was then taken not to open negotiations with the Council and instead turn to the plenary to test the level of backing of the whole house. The first negotiation meeting, scheduled for Tuesday, is therefore cancelled.

In line with shifting sentiment, both texts stress the need to ensure that fiscal monitoring does not hamper growth. The Commission’s country-by-country assessments would therefore need to be more comprehensive, to ensure that budget cuts are not made at the cost of killing off investments with growth potential.  Moreover, for countries being asked to undertake significant cuts these efforts must not harm investments in education and healthcare.

Member States would also be required to detail which of their investments had a growth and jobs potential and the deficit reduction timetables would be applied more flexibly in exceptional circumstances or in a severe economic downturn.

The adopted texts take up the debt issuance reporting requirements advocated by Member States in their common position on the “two pack”, but also go much further. For example, a specific process for coordinating debt issuance annually is proposed and countries would be required to report in advance on their debt issuance plans to the Commission and Council.

Most importantly on the matter, a European Debt Redemption Fund would be set up and, one month after the legislation’s entry into force, the Commission would present a roadmap for introducing Eurobonds and a proposal for a growth instrument, which would mobilise around 1% of GDP per year over a ten-year period for infrastructure investment.

However, the centre right group stressed that it would fully support the principle of a redemption fund only if the proposal were backed by an analysis, which the text calls on the Commission to carry out by the end of this year.

A further addition to the Commission’s proposals is a provision on legal protection to countries facing bankruptcy, to give them more stability and predictability in tackling their problems.  Such a rule would provide more clarity where a country is on the verge of default.  Once under such protection, a country could not be declared to have defaulted, its creditors would need to make themselves known to the Commission within two months, and loan interest rates would be frozen.

Referring to the aim of the meeting he said they wanted “to see how we can work more effectively together to enable Greece to make the most of its cohesion funding at this critical time” and also to see how we can with this reinforced monitoring and reinforced technical assistance do more to create hope for Greece. “We want to seize this moment to help get the Greek economy moving again,” Barroso stressed.

He added: “The second programme has a very strong focus on reforms that we believe will transform the capacity of the Greek economy to generate growth and jobs. It is important that this is recognized, so that the second programme does not, like the first, suffer from misperceptions as being all about fiscal consolidation. Of course fiscal consolidation is indispensable but this is not just a programme of fiscal consolidation, it is a programme for structural reforms, competitiveness and growth in Greece.”

Barroso said that there are over EUR 20 billion in structural funding available to Greece for the 2007-2013 period. “We have already released more than EUR 8 billion in payments but there is scope for doing much more before 2013. And we are already giving the priority to the payments to Greece. This means also that we need to get essential growth-enhancing projects off the ground. We have identified a number of these, which could give a particular boost to investment and employment,” he said.

Eurogroup chief Jean-Claude Juncker told the Economic and Monetary Affairs Committee yesterday, a European Commissioner should be nominated to help return Greece to growth, according to an official announcement. He also observed that there was scope for cuts in the country’s military spending.

Speaking at one of his regular meetings with the committee, Juncker fielded MEPs’ concerns about the need for growth to emerge from the fiscal crisis, the next steps in solving Greece’s problems and boosting the firepower of the bailout funds. Juncker said he had hoped this would have been the week when a decision was taken to boost the European Stability Mechanism’s capital, but the idea “needed to mature further in some countries”.

On Greece, he said the Eurogroup would be keenly awaiting the participation rate of private Greek bondholders, which “would need to reach 66% for the collective action clauses to be activated”. He also stressed that the Greek government needed to act on the commitments it had given to ensure that the second bailout programme could become effective, and at the same time insisted that “it was time to stop humiliating Greece“.