BRUSSELS, Oct 23 (Reuters) - European Union leaders will back next week a reform of EU budget rules which introduces new sanctions for rule-breakers but retains political discretion over the process, draft conclusions of the EU summit showed.
The reform, which the European Central Bank, the executive European Commission and several smaller euro zone countries wanted to be more ambitious by making the sanctions almost automatic, was watered down by Germany and France.
Changes to the rules, the Stability and Growth Pact, are in a report that the President of the European Council Herman van Rompuy, who chaired the task force of ministers preparing them, will present to EU leaders next week.
"The European Council endorses the report of the task force on economic governance," draft conclusions of the leaders summit, obtained by Reuters, said.
"The European Council calls for a 'fast track' approach to be followed, in order for the Council and the European Parliament to reach agreement on the Commission's legislative proposals by summer 2011 and to ensure the effective implementation of the new surveillance arrangements as soon as possible," the draft conclusions said.
European Central Bank President Jean-Claude Trichet said on Saturday in South Korea that new rules pushed by France and Germany were too weak to safeguard the euro zone.
The van Rompuy report says Trichet does not support all the points in the finance ministers' agreement.
But EU leaders are likely to praise the reform nonetheless.
"Its implementation will allow to increase fiscal discipline, broaden economic surveillance, deepen coordination, and set up robust framework for crisis management and stronger institutions," the draft said.
"The result will be a substantial strengthening of the economic pillar of EMU, enhancing confidence and thus contributing to sustainable growth, employment and competitiveness," it said. (Reporting by Jan Strupczewski, editing by Alison Williams)