Friday

29th Mar 2024

French deal enrages small countries

France has won more time in its battle with the European Commission over its breach of the rules that underpin the euro.

In late night talks tonight (3 November), the eurogroup - the finance ministers of the 12 countries that share the euro - decided to postpone any decision on what to do with France until its next meeting, scheduled for the 24 November.

Read and decide

Join EUobserver today

Get the EU news that really matters

Instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

  • France has repeatedly broken the rules that underpin the euro (Photo: European Commission)

France is in hot water with the Commission as well as its peers for its repeated failure to bring its budget deficit below the EU's ceiling of three percent of GDP.

The Commission recently gave France an extra year to comply with the rules - known as the Stability and Growth Pact - but also insisted that it make bigger cuts than it currently plans. Paris rejected the Commission recommendations.

But French finance minister Francis Mer yesterday unveiled new measures to reduce France's deficit. These measures - as yet unspecified - will be presented to the Commission and the Council in time for the next meeting.

French sources indicated that Mr Mer had presented a "credible path" towards satisfying the Commission's demands. But, according to a French official, Mr Mer repeated to his colleagues that the Commission's current demands on France are "untenable".

Speaking for the Presidency, Italian finance minister Giulio Tremonti said that the majority of member states welcomed the French initiative - with the exception of three countries - the Netherlands, Austria and Finland.

No U-turns in the Treaty

The Dutch finance minister, Gerrit Zalm, is especially angry at the postponement.

Speaking to reporters before the meeting, he said, "I think the Treaty should be executed strictly … if countries don’t keep to treaties, it will be negative for the EU economy". He aded, "there is no provision for U-turns in the Treaty".

After the meeting, diplomatically described as "wide-ranging" by Mr Tremonti, a spokesman for Mr Zalm told the EUobserver, "we haven't made any progress. Things look the same from a Dutch perspective as they did before".

Nevertheless, on his way in to the meeting, Mr Zalm did drop his threat to take legal action against the Commission for not proposing sanctions against France.

The Austrian finance minister, Karl-Heinz Grasser, declared himself "absolutely not" prepared to compromise on this issue.

He said he agreed with Wim Duisenberg, former President of the European Central Bank, that "we have made a contract with every euro zone citizen, and this is why it is so sensitive".

Controversy rolls on

The controversy now moves on to the ECOFIN council of finance ministers, which begins early today (4 November).

This group includes the 12 countries that share the euro, as well as the UK, Sweden and Denmark – member states which remain outside the euro zone. It is only this group that can make formal decisions, but it is expected to endorse the eurogroup's decision.

The ECOFIN council will mainly be discussing France’s budgetary situation, but will also touch on the growing pensions crisis in the EU and accounting standards.

In addition, the 15 EU finance ministers will be joined informally by finance ministers from the acceding countries. They will discuss the pre-accession economic programmes (PEPs) of these future EU members.

Duisenberg warns of 'disaster' for Europe ahead of stormy meeting

The outgoing President of the European Central Bank, Wim Duisenberg, warned today (31 October) that dismantling the rules underpinning the euro would be a "disaster for Europe". The comments come ahead of what promises to be a stormy meeting of EU finance ministers next week.

'Swiftly dial back' interest rates, ECB told

Italian central banker Piero Cipollone in his first monetary policy speech since joining the ECB's board in November, said that the bank should be ready to "swiftly dial back our restrictive monetary policy stance."

Opinion

EU Modernisation Fund: an open door for fossil gas in Romania

Among the largest sources of financing for energy transition of central and eastern European countries, the €60bn Modernisation Fund remains far from the public eye. And perhaps that's one reason it is often used for financing fossil gas projects.

Latest News

  1. Kenyan traders react angrily to proposed EU clothes ban
  2. Lawyer suing Frontex takes aim at 'antagonistic' judges
  3. Orban's Fidesz faces low-polling jitters ahead of EU election
  4. German bank freezes account of Jewish peace group
  5. EU Modernisation Fund: an open door for fossil gas in Romania
  6. 'Swiftly dial back' interest rates, ECB told
  7. Moscow's terror attack, security and Gaza
  8. Why UK-EU defence and security deal may be difficult

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic Food Systems Takeover at COP28
  2. Nordic Council of MinistersHow women and men are affected differently by climate policy
  3. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  4. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  5. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  6. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?

Stakeholders' Highlights

  1. Georgia Ministry of Foreign AffairsThis autumn Europalia arts festival is all about GEORGIA!
  2. UNOPSFostering health system resilience in fragile and conflict-affected countries
  3. European Citizen's InitiativeThe European Commission launches the ‘ImagineEU’ competition for secondary school students in the EU.
  4. Nordic Council of MinistersThe Nordic Region is stepping up its efforts to reduce food waste
  5. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  6. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA

Join EUobserver

EU news that matters

Join us