European Commission President Mr Romano Prodi faces a grilling in the European Parliament today after infuriating supporters of fiscal discipline by calling the budget rules he is supposed to enforce "stupid".
Mr Prodi stuck to his guns on Sunday after his comments to the French daily Le Monde that the rules were too rigid caused consternation in the Commission and prompted demands for him to explain himself in parliament or face possible censure.
Interviewed on France's Europe 1 radio, the former Italian premier said: "I would repeat that interview word for word." He defended the key budget deficit limit of 3 per cent of gross domestic product which is the key target of the Stability and Growth Pact, designed to protect the euro currency, but called for more power to interpret the rules flexibly.
Mr Prodi agreed reluctantly to appear before parliament in Strasbourg today after a barrage of criticism from the three main political groups and the veiled threat of a no-confidence vote if he did not show up.
EU policymakers and lawmakers suggested his comments undermined the rules the Commission is struggling to enforce against resistance by the three biggest economies in the euro zone - Germany, France and Italy.
"Calling the (rules) into question is very dangerous because it could undermine confidence in the euro," European Central Bank council member Mr Ernst Welteke told Germany's Bild am Sonntag newspaper.
Critics of the pact say it forces governments to raise taxes or cut spending at exactly the wrong moment in the economic cycle - during a downturn - when fiscal policy ought to be looser to reignite growth.
Some say the rules target the wrong measurement and should focus on the sustainability of member-states' debt levels.
In a withering letter hinting at a possible censure motion, the head of the biggest parliamentary group, Mr Hans-Georg Poettering of the centre-right European People's Party, accused Mr Prodi of a breach of trust by publicly attacking a fundamental pillar of EU law.
"I fear your use of the term 'stupid' to describe the Stability Pact was a grave error as it causes great damage to our currency and undermines economic and political confidence in it," Mr Poettering wrote.
Parliament forced the resignation of the previous Commission headed by Mr Jacques Santer of Luxembourg in 1999 over allegations of fraud, nepotism and mismanagement. The assembly has the power to sack the whole Commission but cannot censure an individual member.
Political analysts do not believe the centre-right-dominated parliament will try to oust the centre-left Prodi in the run-up to a historic December decision on the EU's eastward expansion. But some say there could be pressure on him to leave next year rather than completing his term at the end of 2004.
Speaking to Europe 1 on a visit to Paris, Mr Prodi argued that the euro zone needed an economic government to help co-ordinate policies among the 12 members of the euro currency.
Such a central authority, which he sees as centred on the Commission, could apply the Stability Pact's rules according to changing economic circumstances. "It is not possible to live only with fixed rules, given the complexity of the economy. We have to have an authority to interpret all the difficulties and variations of the economy.
"It is impossible to manage the economy of 12 countries with the same currency without an authority with the power to do that," he said. Asked if this meant he was admitting he did not have the power to enforce the pact's rules, he said: "Yes, I've said clearly that I have the power to emphasise them, to point them out, to invite (countries to follow them) but not to decide - I have to be honest." - (Reuters)
