BP chairman and former European Commissioner, Mr Peter Sutherland, said yesterday that EU finance ministers' failure to enforce the pact that underpins the euro meant there were no rules governing the currency.
The union's finance ministers this week decided against sanctioning France and Germany for not keeping their budget deficits to 3 per cent of gross domestic product (GDP), the level demanded by the Stability and Growth Pact.
The European Central Bank (ECB) condemned their decision, as it threatened to undermine confidence in the euro. Their move also prompted fears of an early rise in interest rates.
Speaking to The Irish Times after addressing students at the National College of Ireland (NCI), Mr Sutherland said the ministers took the wrong approach if they believed that the pact was not flexible enough for day-to-day economic reality.
"I think that it's very unfortunate that the decision was taken by flying in the teeth of the rules rather than by changing the rules," he said.
"The pact should have been addressed by changing and modifying the rules.
"If we are going to have to modify it [the pact\], we are still going to have to have rules. You cannot have a system of anarchy, and the problem with this is that they have left the impression that there are no rules at all."
Mr Sutherland said he believed that the pact's terms were too rigid and argued that this should be dealt with by changing its terms.
However, he pointed out that the decision had not affected the currency's value.
Originally a barrister, Mr Sutherland, was attorney general in the 1980s before serving as European Commissioner for competition.
He chaired the Uruguay round of the General Agreement on Tariffs and Trade (GATT, now the World Trade Organisation) in mid-1990s.
He is non-executive chairman of oil company, BP, and a director of the board of stockbrokers, Goldman Sachs.
In his lecture, he told NCI students that oil companies like BP had to meet the challenge of balancing their broad social responsibilities with creating sustainable value for their shareholders.
He pointed out that while the company had spent over $1 billion (€840,000) trying to develop alternative fuels.
"But the reality is that oil will be with us for a long time," he said.
Mr Sutherland said that BP was conscious of the negative consequences of oil use, and worked at developing initiatives aimed at limiting these.
"We try to do things in a better way," he said.
