Brussels, 11/02/2002 (Agence Europe) - It is at the meeting of the Eurogroup Monday evening that, between Economy and Finance Ministers of the euro zone chaired by Rodrigo Rato, the substance of the opinion that Tuesday's EcoFin Council is to issue on Tuesday regarding Germany's public deficit should be thrashed out. According to a European diplomat, "the main part of the issue will be thrashed out at this meeting between the Twelve". Especially as we know that alongside Luxembourg and Portugal, the United Kingdom has joined those countries which, like Germany, consider that initiation of the early warning procedure to be totally unwarranted.
Ministers are faced with two scenarios: - either German Minister Hans Eichel will have received strict instructions from Chancellor Gehard Schroeder to do all he can to avoid not only the warning, but also an EcoFin Council opinion drawn up in "ignominious" terms for Germany (in which case, deadlock would be inevitable and should manifest itself at the EcoFin Council); - or else a compromise solution will be found, enabling the Council not to initiate this procedure, with firm undertakings from Germany on the subject of the public debt (to do all to avoid reaching the 3% of GDP mark) and its goal of reaching, by 2006 (in 2005), a balance in its public finances. The whole difficulty will, in this latter most likely case, consist in convincing certain Member States (Finland, the Netherlands, Belgium) and the Commission to overlook the rigorous interpretation of the resolution of the European Council of Amsterdam on the early warning procedure.
Even though the economic and budgetary situation is different in Portugal (and even more worrying in some of its aspects, the country having experienced a real slide in its structural expenditure), it should be dealt with in the same way as Germany, Community sources stress.
The Eurogroup should also turn to the general economic situation (in the light, notably, of the results of the G7 meeting in Ottawa: see below) and be briefed by Pedro Solbes on the latest details concerning the introduction, in the twelve countries concerned, of the coins and banknotes in euro.
For Solbes, a warning is justified - Schroeder: the EU must "look after
a cow that provides good milk"
On the fringe of the G7 Summit in Ottawa (see below), Mr. Solbes reaffirmed that the Commission wanted to address a remonstration to Germany due to the scale of its budgetary deficit. "We remain convinced today, the figures of the German deficit are still the same" (2.6% in 2001 and 2.7% in 2002), he said, also backed by the President of the Bundesbank, Ernst Welteke, who said that he was right behind the Commission's stance. If we are to believe what he said in Berlin on Friday, Chancellor Schroeder is not backing off and still does not understand why the Commission wants to inflict this warning on the country. "We are told that the policy we are conducting is sound, and at the same time there is talk of penalising us", he said in astonishment, hinting that he was paying for the mistakes of his predecessor, Helmut Kohl, the intellectual father and political mother of the Stability and Growth Pact. Mr. Schroeder recalled ironically that his country's net contribution to the Community budget was 0.46% of its GDP, and considered that it was in Europe's interest "to look after a cow that provides good milk".