France upbeat about Stability Pact debate

The two major ‘sinners’ France and
Germany are gearing up for a first round of informal
discussions on how best to reform the ailing Stability and
Growth Pact.

The eagerly awaited informal debate on the Stability
and Growth Pact among finance ministers will be taking
place in Scheveningen on 10 and 11 September. The pact
has been in crisis ever since France and Germany, the two
major ‘offenders’, were let off the hook by the Council.
The European Court of Justice ruled against the Council
on procedural grounds but the Commission’s recent
Communication (see 
EURACTIV 3 September 2004

) clearly shows their recognition of the need for debate
to clear the air on this issue. 

“The communication fits in with the ideas put forward
by the Minister of Finance Sarkozy. It’s a good starting
point for debate,” said DePoncins, a spokesperson for the
French Permanent Representation in Brussels. De Poncins
also told EURACTIV that the nature of public expenditure
should be taken into account. In this context, he
defended military expenditure by the UK and France on the
basis that it helps ensure security for the whole of
Europe. 

In a speech to the Bundestag on 7 September, Germany’s
Finance Minister Hans Eichel said the country’s
violations were not “on purpose” and that the key was to
link the budget consolidation debate with the
‘solidarity’ funds and EU budget debates. He underlined
that countries such as Spain, Ireland and Portugal should
be relinquishing some of the solidarity funds and that a
tight lid needed to be kept on the EU budget. 

The Bundesbank is less than impressed with the
Commission’s Communication. It was quoted by Agence
France Presse as saying that the proposed changes will
not strengthen but weaken the stability pact. There was
no comment from the Banque de France. 

Other major issues on the agenda include the new
financial perspectives (EU budget) 2007-13 and reducing
the administrative burden. The appointment of a ‘Mr Euro’
for the Eurogroup, widely expected to be Luxembourg Prime
Minister Jean-Claude Juncker, and the recent surge in the
price of oil will also be discussed. Another issue likely
to be on the table is French Finance Minister Nicolas
Sarkozy’s controversial idea for the EU to stop paying
out structural funds to new Member States with tax rates
inferior to the EU average (see 
EURACTIV 7 September 2004

). 

Read more with Euractiv

Press review: Debate on Stability and Growth Pact

EURACTIV sums up press reaction from the UK, France and Germany as the Commission sets out the ground rules in the debate on how to reform the Stability and Growth Pact.