Blijvende onenigheid over hervormingen Stabiliteitspact (en)

EUOBSERVER / SCHEVENINGEN - Differences between EU member states continue to dog debate on reforming the rules governing the euro - a sensitive topic described Friday (10 September) by the Dutch Presidency as "nasty".

The 25 Finance Ministers gathering in the seaside town of Scheveningen - near the Hague - were today discussing proposals by the Commission to rework the Stability and Growth Pact - the rules underlying the euro which have caused such tension in recent years.

The Commission plans broadly made the rules more flexible whilst keeping intact the requirement that member states run a budget deficit below three percent of their gross domestic product (GDP).

Since their publication, several authorities - including the German Central Bank - have rushed to criticise them, claiming that the result will be a weakening of fiscal discipline in the 12 member euro zone.

And whilst ministers agreed that the proposals were "a good basis for discussion", they failed to agree on any concrete aspects of the reform and the debate is expected to continue well into next year.

Mr Euro for a strong pact

Broadly speaking, the euro zone's powerhouses - France and Germany - pronounced in favour of loosening the rules - unsurprising since they are in breach of them.

Germany's Finance Minister Hans Eichel insisted, "It's not about weakening the pact but about sensible application".

But the newly appointed President of the group of 12 euro finance ministers, Luxembourg's Prime Minister Jean-Claude Juncker, hinted that he was in favour of a strict pact. He was in favour of making the pact "more efficient, not more flexible", he told journalists.

And his deputy from 1 January next year - Austria's Finance Minister, Karl-Heinz Grasser - went further, saying that "Austria will not be part of a weakening of the Pact".

The current President of the group - Dutchman Gerrit Zalm - is well known for his attachment to a strict Stability Pact, but he was not budging from his Presidency role today.

Pointing to a Presidency label in front of him, Mr Zalm quipped, "whilst I sit behind this board, I have no personal opinions".

But he said, "Ministers do not look for a watering down of the pact, but rather for a strengthening and clarification and better implementation".

Better than expected

Mr Zalm was generally upbeat about the meeting, however, saying that ministers made "better progress than anyone could have expected" and that the meeting "gives hope of reaching consensus in the future".

However, the process is expected to drag on well into next year. Ministers made their recommendations to the Economic and Financial Committee (EFC) - a group of experts from member states which prepares the meetings. The EFC will then report back with technical analysis.

These recommendations include a stronger emphasis on the "preventative arm" of the Pact, meaning that peer pressure should be applied to member states to reduce deficits before they breach the three percent ceiling.

Ministers also emphasised that "the three percent limit and the 60 percent debt criterion in the Treaty remain of paramount importance" and that "the Treaty should not be changed".

But Mr Zalm has already warned that agreement will not be reached during his Presidency of the euro group and the Commissioner for Economic and Monetary Affairs, Joaquin Almunia echoed this today saying, "I would not be surprised if we continue this discussion into the Luxembourg Presidency".

Mr Almunia insisted that "ministers will have to make the hard choices if we are to restore credibility in our budgetary coordination process".