TONY ALLWRIGHT,
Madam, - Romano Prodi, President of the European Commission, describes the Stability and Growth Pact, which imposes a compulsory limit of 3 per cent of GDP on government deficits, as "stupid and rigid"; France agrees (Business This Week, October 18th).
Meanwhile, under pressure from the biggest member-states, euro-zone finance ministers have already decided (Business, October 9th) to allow Germany, France, Italy and Portugal to exceed the 3 per cent limit from now until 2003 because those states won't undertake the tough restructuring required to avoid breaching it. France, still not satisfied, has said that due to "other priorities" it has no intention of reining in its deficit until at least 2004. It will therefore be happy that the Commission has apparently now agreed to postpone the deadline even further to "at least 2006".
Do readers remember that last year the European Commission censured Ireland for proposing a budget that the Commission deemed was inflationary? (Charlie McCreevy strongly rebutted this, of course, and ignored the reprimand - though it is now clear that the Commission was right!) Some months later, little Portugal was also ticked off for a deficit that was in danger of crossing the 3 per cent threshold.
The Stability and Growth Pact has exposed the fact that a two-tier Europe is already firmly in place: there are big countries which flout the rules with impunity (the "avant-garde", to quote Jacques Delors) and small countries which may not. - Yours, etc.,
TONY ALLWRIGHT, Killiney, Co Dublin.