French minister wants 'daunting' sanctions on fiscal sinners
Eurozone countries in breach of the group's rules on deficits and debt should face "daunting" sanctions, including the confiscation of European voting rights, France's finance minister said.
"We need to check how best to impose sanctions" on fiscal miscreants, Christine Lagarde told German daily Frankfurter Allgemeine Zeitung on Monday.
"They must be daunting. We could for example consider withholding money from the (EU) structural and cohesion funds ... then there is the possibility of removing voting rights," she added.
The possibility of expelling a country from the euro area on a temporary basis would, however, be "complicated," she said.
Under the EU's Stability and Growth Pact, countries are obliged to keep public deficits below three percent of gross domestic product (GDP) and debt below 60 percent of GDP. In theory, transgressors can be fined but little in practice has been done.
"Today, we have the possibility of fines but it seems pretty strange to me to impose fines like a hammer blow on a country that already has huge financial difficulties," she said.
Lagarde denied that EU leaders panicked on May 9 in hastily pulling together a near trillion-dollar loan package to bolster euro countries that could find themselves in difficulties similar to those suffered by debt-laden Greece.
"We were close to a situation like we had after the collapse of Lehman Brothers," she said, referring to the fall in 2008 of the giant US investment bank that triggered a liquidity crisis and turmoil on the financial markets.
Also calling for stricter rules on deficits in the wake of the Greece crisis was Austrian Finance Minister Josef Proell, who pushed for a "European debt brake" system, like Germany's law that limits the deficits run up every year.
"This would lead to a clear capping of new debt, to stricter budgetary discipline and finally to balanced budgets in Europe," Proell said in an interview with Die Welt daily.
Both Proell and Lagarde are due to attend a crunch meeting of eurozone finance ministers in Brussels later Monday that will seek to thrash out ways to shore up the falling euro currency amid the ongoing Greek debt drama.
© 2010 AFP