EU finance ministers cleared a major hurdle on Sunday in efforts to reform the rules underpinning the stability of the euro, meeting German and French demands for room to spend their way out of economic problems, officials said.
They reported a deal to ease the "Stability and Growth Pact," retaining the notion that annual budget deficits cannot exceed 3 percent of gross domestic product, but at the same time providing more leeway to legally exceed it in special circumstances.
The agreement ended five months of tortuous negotiations during which Germany and France led demands that the stability rules be interpreted less strictly by the European Commission to give governments space to stoke growth by increasing public spending.
A Dutch diplomat said Germany's partners rejected Berlin's long-standing demand its massive German unification payments be seen as a valid reason to violate the stability pact's austerity rules.
Germany already has spent some 1.5 trillion euros (close to US$2 trillion) on its post-Cold War reunification finance since 1990.
Room to overshoot
"But there is an agreement by the finance ministers to consider unspecified `European unification' costs as a credible reason to overshoot the 3 percent deficit target," said the official.
In that case a government may post a budget gap of 3.5 percent of GDP, but only "temporarily," the official said.
The ministers continued to debate demands by eastern EU members, which joined the EU last year, that their expensive efforts to build up pension funds will not be used to keep them out of the euro in future years.
Officials expected the issue to be resolved.
The reform of the euro rules were contained in a 19-page report, drafted by Luxembourg Premier Jean-Claude Juncker, whose country now holds the rotating EU presidency.
They aim to strengthen and clarify the euro rules' application by the European Commission.
Berlin, Paris, Rome and some other capitals have complained the commission has been heavy-handed and inflexible in that so far.
Five years to comply
Under Juncker's plan, countries exceeding the 3 percent budget norm may in the future invoke their own reasons why they should be allowed to violate the stability rules -- a move that points to a looser interpretation of a country's economic performance and outlook.
Any country exceeding the deficit limit may get up to five years to come back into compliance.
Germany is keen to cite its large contributions to the EU budget -- of which it pays 22 percent -- as a mitigating circumstance to miss the 3 percent deficit rule.
France wants to use its spending on research and defense as an excuse to break through that ceiling without getting notices from the European Commission.
It was expected the new stability rules -- replacing those written in the late 1990s -- will be endorsed by the 25 EU leaders, who are to open a two-day summit in Brussels today.
LONG FLIGHT: The jets would be flown by US pilots, with Taiwanese copilots in the two-seat F-16D variant to help familiarize them with the aircraft, the source said The US is expected to fly 10 Lockheed Martin F-16C/D Block 70/72 jets to Taiwan over the coming months to fulfill a long-awaited order of 66 aircraft, a defense official said yesterday. Word that the first batch of the jets would be delivered soon was welcome news to Taiwan, which has become concerned about delays in the delivery of US arms amid rising military tensions with China. Speaking on condition of anonymity, the official said the initial tranche of the nation’s F-16s are rolling off assembly lines in the US and would be flown under their own power to Taiwan by way
CHIP WAR: The new restrictions are expected to cut off China’s access to Taiwan’s technologies, materials and equipment essential to building AI semiconductors Taiwan has blacklisted Huawei Technologies Co (華為) and Semiconductor Manufacturing International Corp (SMIC, 中芯), dealing another major blow to the two companies spearheading China’s efforts to develop cutting-edge artificial intelligence (AI) chip technologies. The Ministry of Economic Affairs’ International Trade Administration has included Huawei, SMIC and several of their subsidiaries in an update of its so-called strategic high-tech commodities entity list, the latest version on its Web site showed on Saturday. It did not publicly announce the change. Other entities on the list include organizations such as the Taliban and al-Qaeda, as well as companies in China, Iran and elsewhere. Local companies need
CRITICISM: It is generally accepted that the Straits Forum is a CCP ‘united front’ platform, and anyone attending should maintain Taiwan’s dignity, the council said The Mainland Affairs Council (MAC) yesterday said it deeply regrets that former president Ma Ying-jeou (馬英九) echoed the Chinese Communist Party’s (CCP) “one China” principle and “united front” tactics by telling the Straits Forum that Taiwanese yearn for both sides of the Taiwan Strait to move toward “peace” and “integration.” The 17th annual Straits Forum yesterday opened in Xiamen, China, and while the Chinese Nationalist Party’s (KMT) local government heads were absent for the first time in 17 years, Ma attended the forum as “former KMT chairperson” and met with Chinese People’s Political Consultative Conference Chairman Wang Huning (王滬寧). Wang
CROSS-STRAIT: The MAC said it barred the Chinese officials from attending an event, because they failed to provide guarantees that Taiwan would be treated with respect The Mainland Affairs Council (MAC) on Friday night defended its decision to bar Chinese officials and tourism representatives from attending a tourism event in Taipei next month, citing the unsafe conditions for Taiwanese in China. The Taipei International Summer Travel Expo, organized by the Taiwan Tourism Exchange Association, is to run from July 18 to 21. China’s Taiwan Affairs Office spokeswoman Zhu Fenglian (朱鳳蓮) on Friday said that representatives from China’s travel industry were excluded from the expo. The Democratic Progressive Party government is obstructing cross-strait tourism exchange in a vain attempt to ignore the mainstream support for peaceful development
RSS