Eurozone deadlock

Romano Prodi criticizes draconian EU laws

President of the European Commission Romano Prodi yesterday called the European Stability and Economic Growth Pact “stupid and overly straightforward,” although this pact is key to the financial policies of all countries in the euro currency area. In an interview with the French newspaper Le Monde, Mr. Prodi complained that the document cannot even be adjusted due to the lack of flexibility in European Union legislation. “To change this pact,” laments the head of the European Commission, “it is necessary to achieve unanimous support from all euro area countries. And this is practically impossible."

The budget deficit, as 12 EU countries agreed among themselves back in 1992 in Maastricht, the Netherlands, is the main parameter for joining the “European club.” The Stability Pact, adopted in 1996, sets a limit on government deficits of 3%. However, European countries such as France, Germany, Portugal, Italy (by the way, Mr. Prodi is Italian) cannot stay within these borders. In addition, the pact provides for penalties against violators of budget discipline. Their size ranges from 0.2 to 0.5% of GNP.

This year, Brussels has already prepared a “blue letter” (a warning for fines in Germany and Portugal). It took Berlin a lot of effort to ward off this misfortune: just then a flood arrived, which is an “unforeseen circumstance” that, in accordance with the pact, gives some relief.

Romano Prodi is among those EU leaders who consider such tough financial laws premature. “The European Commission is still too weak to maintain the stability of fiscal policy in the eurozone,” he never tires of repeating, to the delight of Germany, Italy and France. He proposes to extend until 2006 the time frame within which national governments of European countries will be able to bring their budgets into line with the Stability Pact.

Other EU laws also raise criticism. The UK recently expressed dissatisfaction with the system of rotation of governing powers in the EU, proposing to appoint the chairman of the organization for a term of not six months, but four, in order to create some kind of permanence. It is noteworthy that dissatisfaction with this is brewing not only in the EU. A senior Russian diplomat confirmed to Vremya Novostei that a more fixed leadership of the European Union would make things easier for Moscow as well. “Naturally, there is a stable mechanism in Brussels - permanent commissioners of the European Commission. But at the same time, the importance of the presiding country, which plays a key role in the governing bodies of the EU for six months, is great,” the source of the Vremya Novostei newspaper specified, hinting that Moscow would fully welcome an extension of the EU presidency.

Katerina LABETSKAYA, Nikolai LYUBIMOV