Home News Euro pact faces legal showdown

Euro pact faces legal showdown

Published on 12/01/2004

12 January 2004

BRUSSELS – The European Commission is poised to launch unprecedented legal action this week against European Union finance ministers for violating eurozone financial rules, EU officials said Monday.

The Commission, the EU’s executive agency and financial watchdog, is expected to decide on the lawsuit at its weekly meeting in Strasbourg on Tuesday.

The action comes almost seven weeks after EU finance chiefs overruled Commission calls for sanctions against France and Germany although the two eurozone heavyweights had run up excessively high budget deficits in breach of the bloc’s strict financial rules.

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

EU insiders said European Monetary Affairs Commissioner Pedro Solbes was determined to take the issue to the Luxembourg-based European Court of Justice.

He is believed to have the full backing of Commission chief Romano Prodi and a majority of other Commissioners although the EU executive’s British, French and German members are opposed to the move.

Germany’s Gunter Verheugen, responsible for EU enlargement in the Commission, told reporters at the weekend that although he opposed legal action, the lawsuit appeared to be inevitable.

“I think the decision will come as suggested by Solbes and Prodi,” he told the German Suddeutsche Zeitung newspaper.

The Commission believes it stands on solid legal ground. The EU executive’s legal service said last week that finance ministers’ failure to take action against France and Germany was a clear violation of the eurozone stability pact.

A court decision was needed to ensure that in a community of law, treaty rules could not be ignored or changed, Commission lawyers said.

Commission spokesman Reijo Kemppinen said Monday the Commission would ask the court to make a quick decision.

Despite the Commission’s focus on the legal aspect of the case, Solbes and others have admitted that the issue is mixed up with high- stake politics in the Union.

France and Germany are the eurozone’s most powerful economies and are also leading contributors to the EU budget.

Subject: German news