Franco-German euro plan is 'the' response to S&P: France
The French-German plan to overhaul the EU treaty is the response to ratings agency Standard and Poor's which warned eurozone nations of possible credit downgrades, French Foreign Minister Alain Juppe said on Tuesday.
Juppe argued that S&P had prepared its warning, issued late on Monday, before it had knowledge of the decisions announced by Germany and France earlier in the day.
Juppe told RTL radio that Monday's plan to toughen EU budgetary rules "is precisely the response to one of the major questions of this ratings agency (S&P) that mentions the insufficiency of European economic governance."
"This is a threat not a decision. It must be taken seriously," Juppe said after S&P's warned the eurozone of possible credit downgrades on the same day that French President Nicolas Sarkozy and German Chancellor Angela Merkel announced their plan.
"We have a trajectory for revising our public deficits that we will stick to," Juppe said.
"This deal which, I'm sure of it, will allow us to move forward at the next European Council (in Brussels on Thursday and Friday), is precisely the response to one of the major questions of this ratings agency that mentions the insufficiency of European economic governance."
"We will considerably improve it (governance) with budgetary discipline," Juppe said.
Juppe said however that he was surprised by the timing of S&P's announcement, of which eurozone governments were forewarned on Monday morning before the ratings agency issued a public statement.
"What strikes me is the timing of this announcement. We knew what was going to happen yesterday morning and Standard & Poor's did not know what was going to happen during the day, meaning the Franco-German agreement."
S&P's warning "was in the pipeline while the Franco-German summit had not yet produced any results and what was hailed by all observers as really a step forward is in large part the response to the agency's questions."
Asked whether he thought the plan would reduce market speculation that has pushed the euro to the brink, Juppe said: "I think so."
"Standard's announcement is not a downgrade, it's a threat of a downgrade," Juppe said.
"It concerns the entire eurozone, perhaps with a particular mention for France but we know that we have to make more efforts than others, that's for sure."
© 2011 AFP