Brussels, 21/01/2003 (Agence Europe) - In Brussels on Tuesday, the economy and finance ministers of EU Member States formally launched an early warning procedure against France and a procedure for "excessive deficit" against Germany due to these two countries sliding off track in their public finances (see above, for the work of the Eurogroup). Whereas Berlin gave way, Paris opposed the Council's recommendations. Mr. Solbes raise the tone, calling on France to respect the obligations stemming from the Treaty.
These procedures triggered against these two countries come together with recommendations on measures to take to reduce the level of the public debts of these two countries.
Mer considers his country must not have a timetable imposed on his country for a return to a balance
While accepting the triggering of the early warning procedure, French Finance Minister Francis Mer disputed (abstaining in the vote) the recommendations accompanying this procedure (reduction of its structural deficit by 0.5% from 2003 already and obligation to balance its public finances by 2006). He acknowledged that it was especially the objective of a return to a balance from 2006 already that posed a problem for France. According to him, France's priorities, as well as those of a country like Italy, was to "create the conditions for major reforms", notably those of pensions and health systems. Pleading in favour of realism in economic matters, Mr. Mer recalled that certain European countries had proven incapable of keeping their promises last year: "some fl back rather than moved forward", he noted in an allusion to Germany and Portugal which, early 2002, escaped an early warning procedure before finally falling under the procedure for excessive deficit. Mr. Mer justified his country's position by using a cycling metaphor: "France has the ability to climb back up the hill that is obviously weaker than other cyclists. But we want to reach the summit just like the others, avoiding breaking down. Even if we arrive a little later than others,, the goal is to get to the summit", he declared, adding: "we want to climb the slope at our own speed not to stumble half-way up. Failure of a cyclists is dramatic for the team as a whole". As sign of good will, Mr. Mer said that his country had recently decided to freeze public spending to reduce the public deficit in 2003.
Mr. Mer said that he remained an "ardent fan of the Stability and Growth Pact, on condition that its reasons are not forgotten" (he mentioned the priority of controlling the debt of the countries of the euro zone). An opinion that his Austrian colleague Karl-Heinz Grasser does not seem to share, doubting France's real support for the Pact's common principles.
Solbes: France "cannot ignore" the obligations of the Treaty
At a press conference, Commissioner Pedro Solbes recalled that "France is a member of the EU" and that it could not therefore "ignore the obligations set in the treaty and those stemming from the acquis communautaire". Mr. Solbes added that Paris "cannot ignore that we share a certain number of obligations that are linked to our belonging to the single currency". Otherwise, "we shall have problems of credibility", warned the Commissioner, calling on France to "contribute in enhancing our confidence in our currency and EMU and face up to its budgetary problems, that will not disappear by being simply ignored". Mr. Solbes also recalled that Paris had to proceed with structural reforms "to reduce the deficit and public debt". "The recommendation was adopted according to established procedures, and this recommendation is binding on France, a all recommendation is binding on all other Member State," he concluded.
Nikos Christodoulakis, President of the Ecofin Council and Greek Finance Minister, assured for his part that the decision to initiate procedure against France had been taken after an analysis had been made of the factors at stake. "The Council considers that the objectives set out in the decisions (on France) are fully accessible", he added.
Programmes of Italy, Greece, Finland (and Sweden) - Concern about the Italian deficit
The Council also adopted opinions on the updated stability programmes of France and Germany (which take on board the Councils recommendations and elements relating to public deficit procedures) as well as those of Italy, Greece and Finland. An opinion was also adopted on the Swedish convergence programme. Expressing its concern about the level of the Italian public debt, the Council considers that economic policies as they appear in Italy's programme partially comply with the BEPG 2002. Above all, the Council calls on Rome to replace, in 2003, exceptional measures (una tantum) by more permanent measures, but finally renounced (as announced in EUROPE of 18 January, p.8) demanding that it present more information on its budgetary and taxation strategy after 2003, during March at the latest. The Council's opinions on the other countries take up most of the remarks made by the Commission (see EUROPE of 9 January, pages 7 to 9).