Solbes hits back at France

30.09.03 @ 17:41

  1. By Richard Carter

BRUSSELS - The European Commission will not shy away from imposing fines on France if it continues to break euro-rules.

That was the message from a determined Economics Commissioner Pedro Solbes today, (30 September).

Answering questions from MEPs, Mr Solbes said, "I am not in favour ... of applying sanctions against France. However, if the day comes and we have to apply sanctions, then we have to apply them".

These sanctions could potentially run into billions of euro but many analysts believe that the Commission would never actually impose them.

France is set to break the EU's Stability and Growth Pact for the third consecutive year, something which at least on paper should trigger fines.

This pact requires Member States to keep their budget deficits - tax receipts minus public spending - to below three percent of their GDP. France has failed to do this for the past two years and has admitted that it will take until 2005 to achieve this goal.

France now has until this Friday (3 October) to reduce their deficit to under three percent, but Mr Solbes confirmed today that this would not happen and that the Commission would take the next step in the process.

A long and maybe expensive process ahead for Paris

Within a month of the 3 October deadline, the Commission will draw up concrete steps that France will have to take to reduce their deficit.

These steps will then be discussed by EU Heads of State on 4 November, who will then decide how long to give France to comply with the Commission's wishes.

Paris will have a maximum of two months, but the time period could be shorter.

"Could be a day, could be two months", Mr Solbes' spokesman told the EUobserver.

When this next deadline runs out, the Commission then recommends fines to the Council, who then vote on whether to impose sanctions on France.

The result: a political crisis

This would in all probability result in a political crisis, with the smaller countries - who by and large adhere to the pact - likely to insist that France has to play by the rules.

But France and allies amongst the larger EU states - especially Germany - would fight hard to avoid fines being imposed.

Escape hatch?

But there may yet be a way out for France. Mr Solbes said that the Commission was looking into "special conditions", which they have yet to define.

Speaking to reporters after the event, Mr Solbes refused to comment further on these "special conditions" but ruled out some sort of "compromise" solution.

However, he did appear to rule out any "softening" of the pact, which has been hinted at by several European leaders, including German Chancellor Gerhard Schröder and French president Jacques Chirac.

Mr Solbes staunchly defended the pact today, saying, "I am convinced that we have to have this framework. It makes sense. I will carry on defending the pact. I don't think we have an alternative".

He added, "if we have an agreement, then the agreement has to be respected".

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