Mer says euro pact 'not dead'

27th November 2003, Comments 0 comments

TOKYO, Nov 27 (AFP) - The European Union's Stability and Growth Pact underpinning Europe's single currency is not dead, French Finance Minister Francis Mer insisted Thursday two days after France and Germany flouted its strict public deficit rules.

TOKYO, Nov 27 (AFP) - The European Union's Stability and Growth Pact underpinning Europe's single currency is not dead, French Finance Minister Francis Mer insisted Thursday two days after France and Germany flouted its strict public deficit rules.

"The spirit of the pact was respected and I do not agree with those who say that it is dead," Mer said at a conference on the first day of a three-day visit to Japan.

Eurozone finance ministers meeting in Brussels triggered an unprecedented crisis Tuesday with a deal suspending "for the time being" disciplinary measures against Paris and Berlin for failing to get their public deficits under 3.0 percent of gross domestic product, as required by the 1997 pact.

The deal infuriated the EU's executive body, the European Commission, and Economic Affairs Commissioner Pedro Solbes denounced the agreement as being without "legal basis".

But Mer argued Thursday the Commission's position was contradicting itself after "proposing to wait one more year".

He was referring to the Commission's adoption last month of a new set of recommendations urging France to get its swollen budget deficit in line with euro-zone rules "by 2005 at the latest".

Tuesday's accord was issued in the form of "Council conclusions", side-stepping the legal requirement laid down in the EU's 1997 Amsterdam Treaty for countries to vote on deficit-busting recommendations issued by the Commission.

If the recommendations had been followed, France and Germany would now be effectively under the economic tutelage of Brussels until they got their deficits down, on pain of multi-billion-euro fines.

EU Economic Affairs Commissioner Pedro Solbes said in an interview published in a Spanish newspaper Thursday that he may take the row over the bloc's tottering stability pact to the European Court of Justice after EU ministers let France and Germany off the hook.

In an interview published Thursday in the German daily Frankfurter Allgemeine Zeitung, Bundesbank President Ernst Welteke said the set of strict budget rules underpinning the euro, had been "seriously damaged" by the decision not to punish Germany and France for flouting them.

© AFP

                                                                Subject: French news

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