Brussels, 08/02/2002 (Agence Europe) - On Tuesday, the EcoFin Council, chaired by Rodriguo Rato, will try to find a compromise to the opinion adopted on the public deficits in Germany and Portugal, deficits of such a level that, according to the European Commission, warrants the initiation of an early warning procedure. The ministers will, over lunch, discuss the state of negotiations with third countries over the tax on savings and EIB initiatives (see below), and then turn to: - where ratification procedures stand regarding the decision on own-resources; - the financial framework for enlargement; - the introduction of coins and banknotes in euro. Here are the main items on the agenda:
Examining the stability or convergence programmes: the Council has to adopt opinions on the 2001 update of the stability or convergence programmes of eight countries (Germany, Portugal, Greece, France, Italy, Ireland, Spain and the United Kingdom), but discussions will essentially focus on Germany and Portugal, the Commission having asked the Council to initiate an early warning process due to their straying in terms of their public deficits (see EUROPE of 31 January, p.6 and 1 February, p. 9). EUROPE has reason to believe that German Minister Hans Eichel will at all costs seek a unanimous Council solution to avoid ministers having to decide on initiating such a process. Rather than a vote (even should the vote go against the Commission's proposal, of which Germany has no doubt), which could have a negative political fallout for the German Government which already has difficulties within its public opinion and in the German press, Mr. Eichel should try to secure a postponement of the early warning (until September or October), depending on developments in the economic situation. In exchange, Berlin should undertake, according to arrangements yet to be decided, to take corrective measures should its deficit move towards the 3% of GDP mark (or to do all it can for this threshold not to be attained).. In addition, some countries, like France, would like Germany to retract its recent announcement by which it should postpone to 2006 - instead of 2004 - the goal of attaining a budgetary balance. Germany is being called on to undertake to respect this objective of a balance in 2005 at the latest, or, otherwise, to do all it can to avoid a further delay. The Council may decide: - to reject the Commission's recommendation (if a minority block, or 27 votes, emerges at the end of balloting) by adopting a declaration explaining this rejection; - to ratify the initiation of the early warning process. The way Portugal will be dealt with should be similar to Germany, as it is politically unthinkable that Portugal should be the only one to be reprimanded for its public deficit.
Preparing the European Council of Barcelona: the Council will take note of the Frits Bolkestein report on the functioning of the goods and capitals markets ("Cardiff Report") and ministers will also have a policy debate on preparing "key issues" concerning the adoption of the Major Economic Policy Guidelines 2002 (MEPGs), on the basis of papers drawn up by the Commission and Presidency. The latter handed Member States a three-point text, points that it regards as priorities for 2002: 1) economic topics (enhancing the co-ordination of macroeconomic policies within the euro zone, progress in the quality of public finances); 2) the reform of the goods, capital and labour markets; 3) encouragement for a knowledge-based economy and a sustainable development strategy.
Over lunch, ministers will discuss initiatives proposed by the EIB to accelerate growth, the Banks board having approved a proposal aimed at increasing, over two years, the maximum share of EIB funding for a project (from 50 to 75%), and this in four sectors: - transport, the environment, tourism and fields linked to "Innovation 2000" (research & development and education).
EUROPE will return to the subjects to be broached at the meeting of the Eurogroup Monday evening (in which President Prodi is likely to participate), which will be devoted to an examination of the general economic situation, including the budgetary situations in the countries of the euro zone, and the results of the meeting of the G7 in Ottawa, to be held this weekend.