Eurogroup President Jeroen Dijsselbloem has criticised European Commission President Jean-Claude Juncker for saying that the EU executive has given France leeway on fiscal rules “because it is France”.
“If the Commission President says that things apply differently for France, then this really damages the credibility of the Commission as guardian of the pact,” Dijsselbloem said in an interview with German daily Süddeutsche Zeitung and six other European newspapers.
On Tuesday (31 May), asked why the executive had on several occasions turned a blind eye to French infractions, Juncker admitted candidly in an interview with the French senate television channel Public Sénat that it did so “because it is France”.
“I know France well, its reflexes, its internal reactions, its multiple facets,” Juncker said, adding that fiscal rules should not be applied “blindly”.
He then reiterated that France should respect its current commitment to bring its deficit below 3% next year.
‘Turning a blind eye’
“It would be wise for the Commission to pay a little more attention to its credibility,” said Dijsselbloem, adding that member states needed an “objective arbitrator” who upholds the
budget rules manifested in the Stability and Growth Pact.
“You have to be a little careful if it is in your advantage that the commission turns a blind eye … In the end, if we turn a blind eye everywhere, we make a blind monetary union,” Dijsselbloem said.
The European Union is debating how to best apply its fiscal rules, which require a budget deficit under 3% of GDP and public debt to fall, at a time when some argue that more public
spending would help boost economic growth.
The Commission, which is in charge of monitoring national budgets and recommending corrective measures, is sometimes accused by Germany and other northern euro zone governments of being to lenient in applying EU budget rules.
The executive gave France in 2015 two more years to bring its deficit below 3% of GDP, even though Paris appeared to miss agreed targets.
Showing a high degree of flexibility, the Commission has also decided not to launch an excessive deficit procedure against Italy, despite its deviation from the agreed fiscal path to reduce the mastodontic public debt of 132% of GDP. Potential fines were also spared for Spain and Portugal, partly because of the upcoming Spanish elections on 26 June.
The European Commissioner for Economic and Financial Affairs Pierre Moscovici, a French politician close to President François Hollande, has said he hopes all the EU’s excessive deficit procedures will be over by 2017. A change in the European deficit rules may be on the horizon.