Kritiek op voorstellen Schröder voor versoepeling stabiliteitsregels (en)

EUOBSERVER / BRUSSELS - Extensive proposals put forward by German Chancellor Gerhard Schröder to reform the euro rules met opposition on Monday (17 January).

The Bundesbank and the German business federation (BDI) reacted angrily to the chancellor's proposals which aim at reducing the European Commission's power to impose fiscal discipline in member states.

The Bundesbank said the proposals would mean a "de facto" abandonment of the rule in the pact saying that member states may not run budget deficits of more than three percent of GDP.

Mr Schröder's plan for the battered stability pact, set out in Monday's Financial Times, set the tone for the debate at a meeting of the 12 euro zone finance ministers that evening.

Ahead of the meeting, Austria's Finance Minister Karl-Heinz Grasser, a strong defender of the pact, said that the plans would lead to a "deficit and debt" pact.

Dutch Finance Minister Gerrit Zalm said: "It's always difficult if government leaders interfere with the business of ministers of finance".

The European Commission, which would lose out strongly if the chancellor's vision is realised, gave a cautious response saying that the proposals were "an important contribution to the debate".

Mr Schröder proposed, amongst other things, that a country could breach the three per cent ceiling if it is undertaking structural reforms, particularly in the tax and labour market area; experiencing economic stagnation and; facing "specific burdens" such as a high contribution to the EU budget, or, in Germany's case, payments to the former east.

The euro zone finance ministers had a long discussion on the reform on Monday evening and it is expected to be carried on today when all 25 ministers meet.

According to news agencies, the euro zone ministers informally decided that Greece should take further steps to cut its deficit or face potential financial penalties after missing an EU budget-cutting target last year.

This informal decision is expected to be endorsed today.