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Brussels to rule on euro pact action

Published on 09/01/2004

9 January 2004

BRUSSELS – The European Commission will decide next week on whether to take unprecedented legal action against last November’s controversial decision by European Union finance ministers to suspend budget deficit sanctions against Germany and France, EU officials said Friday.

European Commissioners meeting in Strasbourg on 13 January will discuss the “issue of the court case” against governments’ breach of the eurozone stability pact, Commission spokesman Reijo Kemppinen told reporters.

“There will be a decision one way or the other,” Kemppinen underlined.

European Monetary Affairs Commissioner Pedro Solbes warned earlier this week that taking EU governments to the European Court of Justice would be “a useful option”.

EU insiders said, however, that Commissioners from France, Germany and Britain were not in favour of such a move, fearing more conflict with Berlin and Paris.

Kemppinen said, however, that a decision on the issue required the support of a “simple majority” of Commissioners.

The Commission’s lawyers have warned that the finance ministers’ decision last November to drop the threat of fines against France and Germany despite the two countries’ breach of key eurozone financial rules was illegal.

However, Solbes admitted that the issue was mixed up with high-stake politics in the Union.

Germany and France escaped eurozone sanctions against their budget deficits on November 25 after the bloc’s finance ministers refused to follow Commission demands for punitive action against both countries.

Eurozone rules call for Commission action – including the imposition of fines – against countries which run up excessive budget deficits of more than 3 percent of gross domestic product (GDP)) for three successive years.

Both Germany and France have overshot the 3 percent of GDP threshold for three years running, triggering Commission calls for sanctions against the two countries.

The German budget deficit stood at 4.2 percent of GDP in 2003 and while it is expected to fall to 3.9 percent in 2004, it still remains higher than allowed under the stability pact.

France has acknowledged that its budget deficit stood at 4 percent of GDP in 2003, falling to 3.6 percent of GDP in 2004.

Subject: German news