Letter to Ministers Didier Reynders and Jean-Claude Juncker - 16.12.2003

 Implications of their approval of the French and German request to suspend the Growth and Stability Pact at hte ECOFIN meeting of Novermber 2003
     

Mister Didier Reynders
Minister of Finances
Rue de la Loi 12-14
B 1000 BRUXELLES


Lasne, 9 December 2003



Sir ;

SUBJECT : Growth and Stability Pact ECOFIN Council of November 2003


I was astonished to note how few member countries of the Economic and Monetary Union (EMU), and in particular neither Belgium nor the Grand-Duchy of Luxembourg had joined Austria, Spain, Finland and the Netherlands in condemning France and Germany for keeping their public deficits above the 3% limit agreed under the Growth and Stability Pact for several years. 

Since 1997, PROMEURO justifies in its education programmes  this convergence criteria and central element of the Pact in part by the need to get EMU member states to improve their public finances. We also publish an article on the subject by Sir Brian Unwin, former President of the European Investment Bank.

Wishing to explain to our visitors the reasons that pushed members of EMU not to support the Commission in its efforts to have get them to respect the Pact, we would be most grateful if you would accept to respond to the following questions : 

1. To what extent do the French and German deficits support policies aimed at relaunching their economies rather than supporting structural deficiencies of their public services that on the contrary contribute to the economic slowdown in these countries and, by ricochet, in the whole Single Market?

2. In the longer term, have these two countries committed themselves to earn a surplus during the years of normal economic growth, so as to balance out public budgets over an economic cycle? Is one assured that these deficits do not weaken EMU's capacity  to support future deficits caused by the growing number of pensioners? Is one also assured that the excessive deficits will not fuel inflation ?

3. What measures do the Members of EMU envisage to avoid that the French and German laxist attitude do not become contagious and are not adopted by countries with traditional or structural  excessive public deficits?

4. What measures do you envisage to reform the Pact in order to avoid the repetition of these deviations that undermine the citizens' confidence in the European integration?  What new dispositions should be enshrined in the proposed European Constitution to restore confidence in the Pact?


I wish to reassure you that these questions do not stem from a political a priori. PROMEURO is a-political and the association insists in its education programmes that a "high level of social protection" can be financed without excessive deficits as demonstrated by Sweden, for instance.

Mister Jean-Claude Juncker being a Member of our Honorary Committee, I have sent him the same letter. I would like to publish it on our website to illustrate to our visitors our concern for the actual status of economic governance in EMU.
Of course, we would also publish your reply.

Sincerely yours,






New Address: rue Pechère 23, B-1380 LASNE tel : +32 2 654 27 31 fax : +32 2 654 27 47 e.mail : promeuro@biz.tiscali.be

            Jean-Jacques SCHUL