Euro zone pushes for seats at G7

Date: 22/04/1999

By Tim Jones

EU FINANCE ministers are considering asking the German, Italian and French central bank governors to vacate their seats on a key international economic policy forum to make way for euro-zone representatives.

Several governments are keen to use the retirement of Bundesbank president Hans Tietmeyer in September as an excuse to remove the governors from the team representing euro-area nations at the Group of Seven industrialised states' regular gatherings.

The suggestion was made at a meeting in Dresden last weekend of finance ministers from the 11 euro-area countries, plus outsiders Denmark, the UK, Sweden and Greece, and ministers have mandated their top officials on the EU's Economic and Financial Committee to look into it.

Along with Tietmeyer, Bank of France governor Jean-Claude Trichet and the Bank of Italy's Antonio Fazio would be excluded from meetings under the plan.

Euro-area representation would instead comprise German Finance Minister Hans Eichel (also in his capacity as Euro-11 president), France's Dominique Strauss-Kahn and Italy's Carlo Azeglio Ciampi, along with European Central Bank President Wim Duisenberg.

The three 'absentees' could be replaced by presidents of the Euro-11 from smaller member states, addressing Finnish concerns that they could be excluded in the second half of this year. This formula would also open the door to inviting a European Commissioner to attend meetings, although this is still opposed by the US and some large Union member states.

At the Dresden 'enlarged Euro-11' meeting, ministers gave their support to the agreement reached by the EU's summit in Vienna last December on 'speaking with one voice' in international fora.

There, heads of state and government agreed that the euro area should be represented at meetings of G7 treasury chiefs not only by Duisenberg but also by the serving president of the Euro-11. They also agreed that this delegation should be "assisted by the Commission".

However, US Treasury Secretary Robert Rubin was very unhappy about boosting the size of the European delegation and feared that the G7 was being turned into a formal body where euro-zone statements would be agreed in advance and simply restated.

For this reason, former German Finance Minister Oskar Lafontaine declined to invite Economics Commissioner Yves-Thibault de Silguy to a meeting of G7 ministers in Bonn in February.

De Silguy was infuriated and found support from Finnish Finance Minister Sauli Niinistö, who feared that he would be frozen out of coming meetings in his impending role as president of the Euro-11. Niinistö suggested that unless this issue was resolved, Duisenberg should withdraw from further G7 gatherings.

The ECB's aims under the Vienna agreement - 'observer status' on the board of the International Monetary Fund and Duisenberg's presence at G7 meetings - have been met. By contrast, the politically weakened Commission remains an outsider.

The EFC is due to report back to ministers on its conclusions next month.