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4th Mar 2024

Eurozone ministers aim barbed words at Germany

  • Mr Juncker on Monday: Germany has been accused of dragging its feet over the recent eurozone crisis (Photo: consilium.europa.eu)

Euro area finance ministers meeting in Brussels on Monday evening (17 May) failed to make much headway on the detailed operation of the recently agreed €750 billion support mechanism, as tensions grow amid perceptions of continued German foot-dragging.

The euro's continued slide provided the backdrop to the late-night meeting, with the single currency dipping to a four-year low against the dollar in trading yesterday, before recovering slightly.

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Arriving to chair the meeting in Brussels, Luxembourg Prime Minister Jean-Claude Juncker said he was concerned by the speed of the euro's fall. "I am not worried as far as the current exchange rate is concerned, I'm worried as far as the rapidity of the fall is concerned," he said.

Mr Juncker is among those who believe the plethora of recent remarks from senior German policy makers is adding to market doubts over the effectiveness of the eurozone's support package. On Sunday, Germany's Angela Merkel said the mechanism would buy nothing but time, urging member states to push ahead with reform.

Asked whether he felt these comments were helpful, Mr Juncker said: "In my opinion, certain people would do better to think before they speak ...sometimes they would do better to keep their mouths shut."

An aide to the long-serving politician later insisted to AFP that the comments were directed at Deutsche Bank chairman Josef Ackermann, German central bank head Axel Weber and ECB chief economist Juergen Stark, all of which have recently spoken out against aspects of the extraordinary measures taken to shore up the finances of Greece and the rest of the eurozone.

His frustration appears to be shared by the caretaker Belgian prime minister, Yves Leterme. "We finalised an agreement to defend the euro. We cannot, like Madame Merkel, put into question its feasibility," Mr Leterme said on Monday.

German parliamentary approval

The failure to agree on the operational details of the €750 billion support mechanism resulted in Mr Juncker calling another eurogroup meeting of the 16 finance ministers this Friday.

Speaking after the meeting, EU economy commissioner Olli Rehn said "the principles are clear" but that "the technical and legal details remained to be clarified."

Part of the discord appears to stem from a demand from Berlin that German parliamentary approval be granted before countries can tap the support package, with German finance minister Wolfgang Schauble citing national constitutional requirements.

Mr Schauble also raised the prospect of mimicking Germany's constitutional spending brake across the eurozone. Last year, the country enshrined in its constitution a law forbidding the federal government from running a deficit of more than 0.35 percent of GDP by 2016.

Mr Juncker explained after the meeting that it remained to be seen how much support such a measure would command, with the majority of EU states failing to comply with the more modest demand's of the bloc's Stability and Growth Pact which limits deficits to three percent of GDP.

Berlin is due to provide greater details on the idea this Friday, when European Council President Herman Van Rompuy hosts the first meeting of a taskforce set up to decide rules for greater EU economic governance by the year's end.

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