Dutch minister accuses Europe of 'cold feet' over budget fines
Dutch Finance Minister Jan Kees de Jager says EU member states are getting "cold feet" about giving Brussels the power to impose automatic fines when they breach budget rules.
Mr De Jager made his remarks ahead of the last meeting of EU president Herman Van Rompuy's "task force" on economic governance before recommendations are presented to national governments next week. The Dutch finance minister argued that the EU finance ministers "should support sanctions that are as automatic as possible." EU Economic Affairs Commissioner Olli Rehn said that the talks would show "whether states are genuinely for reinforced economic governance or not." "Now is the moment of truth," he said. In the spring the EU placed great emphasis on tightening budgetary discipline, in an attempt to allay fears that the Greek debt crisis might spread to other weak eurozone economies. However, as the economy stabilised and focus shifted to devaluations of rival currencies such as the US dollar, the yuan or the British pound, the desire to strengthen EU oversight diminished. In reaction to reports that Italy and France had succeeded in torpedoing a reform drive, European Central Bank President Jean-Claude Trichet said at the weekend that "more ambitious reforms are needed".
Commissioner Rehn wants Brussels to be able to force countries that overstep a debt threshold - currently set at 60 percent - of gross domestic product to adhere to strict reduction targets, or forfeit fines. However, Italy wants a more balanced view of national debt to be taken, so as to even out public and private debt. Italian public debt, among the highest in the world, is predicted to peak at 119.2 percent of GDP next year. However, its proportion of private debt is relatively small compared to other countries such as Ireland or non-euro Great Britain.
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