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EU stability pact in tatters over deficit deal
Brussels, Nov 25: France and Germany ran roughshod over the European Commission early today in persuading their EU partners to allow the Euro zone`s two biggest economies to fix their budget deficits on their own terms.
Brussels, Nov 25: France and Germany ran roughshod
over the European Commission early today in persuading their
EU partners to allow the Euro zone's two biggest economies to
fix their budget deficits on their own terms.
Economic and Monetary Affairs Commissioner Pedro Solbes
was furious after falling victim to the equivalent of a
political mugging at the hands of the European Union's two
most influential member states.
The Spanish commissioner, normally the picture of affability, accused finance ministers from the 12-nation Euro zone of tearing up the rule-book, and refused to rule out the threat of court action to uphold EU law.
The stitch-up, at talks that stretched long into the night, left the Euro zone budget rules as set out in the 1997 stability and growth pact in tatters.
A majority of the Euro zone countries, with the exceptions of Austria, Finland, The Netherlands and Spain, backed a Franco-German proposal to issue a "political declaration" on the deficit question rather than following the letter of the stability pact.
Had they done so, as demanded by Solbes, the "big two" could have been facing the prospect of multi-billion-Euro fines for failing to get their deficits below 3.0 per cent of gross domestic product (GDP).
In the event, according to EU sources, the declaration merely called on the pair to get their deficits under the limit by 2005. And crucially, they will be let off even that target if economic growth fails to match expectations.
Bureau Report
The Spanish commissioner, normally the picture of affability, accused finance ministers from the 12-nation Euro zone of tearing up the rule-book, and refused to rule out the threat of court action to uphold EU law.
The stitch-up, at talks that stretched long into the night, left the Euro zone budget rules as set out in the 1997 stability and growth pact in tatters.
A majority of the Euro zone countries, with the exceptions of Austria, Finland, The Netherlands and Spain, backed a Franco-German proposal to issue a "political declaration" on the deficit question rather than following the letter of the stability pact.
Had they done so, as demanded by Solbes, the "big two" could have been facing the prospect of multi-billion-Euro fines for failing to get their deficits below 3.0 per cent of gross domestic product (GDP).
In the event, according to EU sources, the declaration merely called on the pair to get their deficits under the limit by 2005. And crucially, they will be let off even that target if economic growth fails to match expectations.
Bureau Report