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EU: Flexible Interpretation of Stability Pact

Schröder and Chirac plead for flexible interpretation of stability pact

Chancellor Gerhard Schröder and President Jacques Chirac have asked their European partners to be tolerant of the large budget deficits their countries currently have. After a meeting the two leaders pleaded for a flexible interpretation of the EU stability pact.

Both heads of government are determined to reduce their countries' budget deficits. Schröder remarked that the EU Commission "should be interested in seeing the German and French economies grow, since their growth has a very strong effect on European growth."

Chirac noted that the governments in Berlin and Paris do not want to "run the risk of interrupting the process of economic recovery" and, as such, have asked the EU Commission and the European partners to be understanding of the reform processes taking place in Germany and France and of the budget problems that are accompanying these processes.

Germany is Europe's largest economy, France its second largest. Both are struggling not to exceed the three percent deficit limit agreed among euro-zone countries. France expects to exceed the limit for the third time in a row next year. The stability pact calls for penalties in such cases.

Germany wants to bring its budget deficit back down below the three percent limit in 2004 after exceeding it for two years in a row. However, this is going to be very difficult. Germany reported a budget deficit of 3.8 percent to the European Commission for 2003.

Full agreement between Germany and France on European issues

Schröder noted that there is full agreement between the French President and himself on European issues. Chirac, for his part, underscored the unity of views taken by the two governments on the EU constitution, EU budget policy, as well as the situation in Afghanistan and in Iraq.

With regard to the draft constitution currently being discussed at an EU intergovernmental conference Schröder said he and Chirac agreed that the proposed text is good and that anyone wanting to take apart the package that was put together by the European Convention would have to come up with something better and that would be very difficult to achieve.

>> Europe needs a constitution

Chancellor Schröder and President Chirac met in Paris on Sunday, October 12. Their foreign ministers, Joschka Fischer and Dominique de Villepin, were also present at the informal meeting. They discussed European and international issues in the course of a working luncheon .

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