Tuesday, September 16, 2003

Luxembourg's Prime Minister Decries EU Deficit Pact "Fetishists"

This is really quite amusing:

STRESA, Italy, Sept 13 (Reuters) - Luxembourg's Jean-Claude Juncker backed France in a controversy over deficits as he met euro zone finance ministers on Saturday, and he decried what he called the strict "fetishists' view" of EU stability pact rules.

"What's essential is to ensure stability and economic growth and if we can do that on a solid basis in 2005 with a very clear system, that's the way to go," Juncker, who doubles up as prime minister and finance minister of his country, told reporters.

After France sparked a furore by saying it would not be able to respect the upper deficit limit of the EU stability pact until 2006, French Finance Minister Francis Mer said on Friday that Paris would aim to get back in line in 2005.

Several countries, above all the Netherlands and Austria, had led a charge against France, demanding that the Stability and Growth Pact be respected by all in the euro zone and not to make exceptions for countries like France.

The European Commission has also demanded that France do more to respect the rules and get its deficit back under the pact's upper limit for national deficits -- three percent of gross domestic product.

"Why demand it right now and shout from the rooftops that it must be done on October 28, 2004, if there's a guarantee it can be done in 2005?" he said.

"I don't like the fetishists' view on this issue," Juncker, a veteran of EU politics and the negotiations that led to the creation of the euro currency, said on the second day of talks with colleagues in the northern Italian lakeside resort town of Stresa.

I agree to some extent with Mr. Juncker's statement that the Stability Pact makes a fetish of balanced budgets, but I think his criticism are nonetheless off the mark. The issue isn't whether or not the pact's terms are being too strictly interpreted, but whether it and other EU rules are to be interpreted in the same manner for all member states, whether they are major powers like France and Germany, or smaller fry like Austria and the Netherlands. These smaller countries cannot be expected to sit idly by as the rules they themselves must abide by are suspended for the French. If the European Union is to be run as a Franco-German club, then what incentive is there for the rest of Europe to participate?