Defiant Prodi steps up his attack on ‘Stupidity Pact’

Date: 24/10/02

By Martin Banks

'STUPID'. That was Romano Prodi's 'honest' assessment of the EU rules underpinning the euro this week.

It was also the honest assessment of many MEPs who feel the European Commission president has fatally undermined the position of Pedro Solbes, the economic and monetary affairs commissioner, who has argued forcibly for member states to abide by the Stability and Growth Pact.

Prodi arrived at the European Parliament in Strasbourg on Monday practically under siege from the media. But if anyone expected him to apologise for, or modify, his comments they were to be surprised.

The president defended - and repeated - his assertion, made in an interview with Le Monde, that the pact was indeed 'stupid' and 'rigid'.

'Awareness of the extraordinary things the pact has brought about, and will continue to bring about, should not blind us to the limitations of the institutional framework in which it is applied,' he told members.

'Still less does it mean enforcing the pact inflexibly and dogmatically, regardless of changing circumstances. That is what I called - and still call - stupid.

'I do not think that it is the role of the Commission or of myself as president to apply rules in that way. EU citizens have a right to be informed and we have a duty to tell them what we think is right, what we think works and what, on the other hand, we think could be improved.

'It is time that we said in public what we say in private,' he added.

Solbes, however, was resolute in defending the pact. In remarks that seemed rather at odds with his master's, the former Spanish finance minister declared: 'I believe the pact provides the member states with rigorous, as well as flexible, rules to meet the short, medium and long-term policy challenges the Union is facing.'

Prodi's comments came under fire from two parliamentary leaders. Graham Watson, head of the Liberal group, questioned the wisdom of Prodi using such 'strong language, especially to a newspaper from the country [France] which is doing the most damage to what remains of the credibility of the pact.'

He said that if it was Prodi's intention to launch a debate on reforming the pact, that was welcome. 'But surely that debate would better have been conducted six months ago. Had the Commission acted more firmly then, its own authority and that of the pact might have suffered less damage.'

Hans-Gert Pöttering, leader of the centre-right European People's Party, said he had been left 'speechless' by Prodi's comments.

But he did not repeat calls from Edmund Stoiber, the unsuccessful challenger in Germany's recent elections, that Prodi should resign. The Commission president's defiant performance predictably won the support of his centre-left and Socialist parliamentary allies.

Christa Randzio-Plath, the German Social Democrat who chairs the Parliament's economic and monetary affairs committee, said: 'The pact has been administered so far with ridiculous rigidity, that has further weakened countries with already weak growth with a counterproductive impact on employment.

'The pact has to respect these other goals and react to changes in the economy. It is an unhappy fact that the pact pays too little attention to growth, which large economies are especially dependent on.'

The controversy comes at a time when several countries, notably Germany, France and Portugal, are struggling to meet targets for containing their national income deficits, a key criterion for adoption of the euro.

The pact was agreed by governments in 1997, at the insistence of Germany, as a means of ensuring that investors would have faith in the European economy ahead of the launch of the euro.

It imposes a compulsory limit on public deficits of 3 of annual economic output and lays out a system of warnings and punishments for offenders.

European Commission President Romano Prodi has defended - and repeated - his assertion, made in an interview with French newspaper Le Monde, that the Stability and Growth Pact was 'stupid' and 'rigid'.