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EU budgets: Stability or stupidity
BRUSSELS, Belgium -- European Commission President Romano Prodi has stood by his description of the pact which underpins the euro as "stupid'' as politicians and central bankers rushed to defend the budget rules. Prodi's spokesman said in Brussels that he would not change a word of a controversial interview which appeared in a French newspaper despite fierce reactions to it, including a call from Germany's top conservative politician for him to resign. "The president does not regret one word of his interview with Le Monde, which is very clear,'' spokesman Jonathan Faull told a news briefing. The Stability and Growth Pact has come under fire in countries such as France and Germany which are worried that its strict rules on euro zone member states' budgets may be too inflexible at a time when economic growth is hesitant at best. The two euro zone giants are both in danger of exceeding the three percent of gross domestic product which the pact sets down as the maximum allowed for budget deficits. Greek Finance Minister Nikos Christodoulakis, who chairs meetings of the so-called Eurogroup of euro zone finance ministers, said on Friday he regarded the pact as "a very essential tool for fiscal stability.'' Stability Pact 'like Christianity'Dismissing differences of emphasis on the Pact, he added: "The Stability and Growth Pact is sometimes like Christianity -- we have the Orthodox, we have the Catholics, we have the Protestants -- but we believe in the same God.'' A fiercer reaction to Prodi's remarks came from Edmund Stoiber, the centre-right German politician who last month came within an ace of wresting the Chancellorship from Gerhard Schroeder at the federal election. "What Mr Prodi said yesterday clearly disqualifies him as president of the European Union,'' Stoiber, premier of the state of Bavaria, told German ZDF television. "He's wasted any remaining trust in the European Commission in Europe.'' Austrian central banker Klaus Liebscher also criticised Prodi and defended the pact, which Germany originally insisted must accompany the launch of Europe's single currency if the new unit was to hold its own on the foreign exchanges. "I hope that Prodi's comments were misunderstood,'' he told reporters in Vienna. "There has to be a reasonable budget policy that limits the countries in their spending,'' Liebscher, a member of the European Central Bank's governing council, earlier told a business conference. He added that the pact's rules are clear and that any country which breached them must be penalised, a reference to the provisions, so far never used, for fining countries which run excessive deficits. Prodi's spokesman Faull again used the word "stupid'' in defending his boss's description of the pact. "He stands completely by his line which is that the pact should be applied intelligently, that it should take account of the economic realities of our economies and that rigidities are stupid,'' he said. He added that Prodi did not intend to accept an invitation from members of the European Parliament for him to come to the assembly next week to clarify what he said in his Le Monde interview.
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