France must reform or face punitive measures: EU's Oettinger

BERLIN Mon May 20, 2013 2:42pm EDT

European Energy Commissioner Guenther Oettinger addresses a news conference on the security of energy supply and international cooperation at the EU Commission headquarters, in Brussels September 7, 2011. REUTERS/Thierry Roge

European Energy Commissioner Guenther Oettinger addresses a news conference on the security of energy supply and international cooperation at the EU Commission headquarters, in Brussels September 7, 2011.

Credit: Reuters/Thierry Roge

BERLIN (Reuters) - France should only be granted more time from the European Commission to cut its deficit if it also introduces reform measures, EU Energy Commissioner Guenther Oettinger was quoted saying on Monday.

Oettinger, a former state premier in Germany and a respected leader in Chancellor Angela Merkel's Christian Democrats (CDU), joined a chorus of senior German officials and CDU figures to issue warnings against allowing France to backslide on its austerity commitments.

His warnings followed similar comments from Bundesbank President Jens Weidmann and deputy parliamentary floor leader Michael Meister, who said last week France and Italy need to worker harder and faster to resolve their structural problems.

The criticism of France comes just as Germany's campaign for the September election gets into full swing. Many conservative voters in Germany are skeptical about the Merkel government's support for rescue packages for struggling euro zone countries.

Oettinger told Die Welt newspaper in excerpts released ahead of publication on Tuesday that it would be a mistake to show leniency for any struggling country in the euro zone that failed to enact urgently needed reform measures.

"There can only be an extension for debt reduction if that is tied to a series of reform measures," Oettinger said. "France should reform its pension system (and) liberalize its labor market." He said France also needed to reduce its state debt.

The European Commission decided last week to give France two more years to slash its deficit to below three percent of GDP because of the country's poor economic outlook within the recession-hit euro zone.

Oettinger said that if France does not introduce reform measures, other instruments should be used to force the country to reduce its deficit.

"The new rules also give us the scope to put punitive measures in the quiver so that we can take steps against countries that don't pursue budget discipline," he said. "We only have to call up these instruments."

German Finance Minister Wolfgang Schaeuble has praised France's reform steps and was quoted saying the decision to give France an extra two years to cut its deficit was "acceptable."

But Bundesbank President Weidmann said in an interview with Bild am Sonntag newspaper on Sunday France has a duty as a euro zone heavyweight to take deficit reduction rules seriously.

(Reporting By Erik Kirschbaum; editing by Ron Askew)

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