Merkel calls EU stability drive 'step in right direction'

12th May 2010, Comments 0 comments

German Chancellor Angela Merkel welcomed new proposals Wednesday to shore up eurozone financial stability as a "step in the right direction" and said she was unfazed by EU plans to vet states' budgets.

Asked about the proposals to create a new pan-European governance regime aimed at taming mounting state debt which threatens the region's financial stability and its wider economic recovery, Merkel was largely upbeat.

"I think they are not yet sufficient but they are an important step in the right direction," she told reporters after talks with visiting Moldovan Prime Minister Vlad Filat, adding that the recommendations would now be "thoroughly debated" in the member states.

Grilled in particular on a proposal that would see the European Union vet member states' budgets before national parliaments do, which has already drawn an angry reaction from Sweden, the chancellor was sanguine.

"First of all, I would say that the budgetary plans of the member states are not secret anyway so the Commission can already today form an opinion about what governments put forward during budgetary debates," she said.

"That does not mean automatically that the budgetary rights of parliament are being called into question in any way. The fact that the Commission can then comment at an early stage and say a budget in no way fulfils the Stability and Growth criteria is, I believe, not a bad thing."

She said such a review would not "supersede" national parliaments' prerogative in budget matters.

Other changes sought by the European Commission include a possible freeze on EU subsidies for eurozone countries that repeatedly breach bloc rules on permitted deficit and debt levels set out in the EU Stability and Growth Pact.

Merkel called for a stronger "surveillance mechanism" for the Pact, adding that such drastic reforms would require changes to the Lisbon Treaty governing decision-making in the 27-nation bloc.

© 2010 AFP

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