CERNOBBIO, Italy, 7 September 2003 — French Prime Minister Jean-Pierre Raffarin said yesterday that even if France intends to break EU rules on budget deficits, it remains firmly committed to fiscal discipline. He said France “is not calling into question the Stability and Growth Pact,” which states that public deficit spending by countries sharing Europe’s single currency must not exceed three percent of gross domestic product.
The European Union’s Stability and Growth Pact says the 12 countries using the European single currency, the euro, must keep their budget deficits below three percent of gross domestic product (GDP). France and Germany have both announced their budget deficits will exceed this ceiling in 2003 — and that they could again exceed the three-percent ceiling in 2004.
The announcements drew sharp criticism from the European Commission, the EU’s executive arm, which warned Paris and Berlin they could face harsh fines if they persisted in flouting the rules. European Competition Commissioner Mario Monti reiterated that warning yesterday, saying a tough stance, including possible sanctions, was crucial.
“Whenever there are rules, it is important they should be applied evenhandedly,” Monti told reporters on the sidelines of the Cernobbio forum. Wherever a country was found to be at odds with the rules “then we should proceed with sanctions as prescribed,” Monti insisted.
On Friday, European Trade Commissioner Pascal Lamy strongly criticized French budget policy and told Raffarin to his face that Paris must play by euro-zone rules. But Raffarin was defiant, retorting that Lamy “has a mandate for (trade) negotiation and we do not think he should depart from that mandate.”
Also on Friday, the spokesman for Economic Affairs Commissioner Pedro Solbes insisted that although the commission would show maximum flexibility, nothing had changed and euro-zone countries had to respect the rules.
Raffarin also said his government had chosen “a prudent option” in predicting an economic growth rate of 1.7 percent next year. He said most economists were predicting a higher rate of 1.9 percent.
Meanwhile, the United States urged Europe not to block a plan to pool data on air passengers, a proposal Washington says will help fight terrorism but which has raised privacy concerns.
“Both sides have been working very hard to resolve their differences ... yet to date we have not reached a sufficient conclusion,” Tom Ridge, head of the US Department of Homeland Security, said.
“I think we still have some way to go to reconcile our differences,” he told a news briefing during the conference in northern Italy.
Last week, the European Commission rejected US demands for airlines to reveal passenger information, saying Washington had failed to give binding commitments that personal data could not be abused in ways that might break EU privacy laws.
