BERLIN, June 20 Former German Chancellor Gerhard
Schroeder has warned indebted southern European states must be
given more time to fix their budgets, otherwise voters will turn
to extremes on the political right and left, endangering the
entire European project.
Schroeder, who governed in a centre-left coalition from
1998-2005, threw his weight behind fellow Social Democrat Sigmar
Gabriel, the economy minister, and his call this week for more
flexibility from Brussels on budget consolidation. Schroeder
said it was in Germany's interests to grant more time.
EU policymakers said while meeting in Luxembourg on Thursday
that Brussels could be flexible but it must have proof that
reform efforts are taking place.
Finance ministers agreed there was no need to change the EU
Stability and Growth Pact, which limits budget deficits to 3
percent of gross domestic and public debt to 60 percent of GDP.
In an opinion piece published in Handelsblatt newspaper on
Friday, Schroeder reminded readers Germany had undergone painful
reforms during his tenure and was now feeling the benefits.
"We know from our own experience in Germany that it takes
years for reforms to work. This time has to be bridged - with
growth programmes and schemes to fight youth unemployment," he
wrote. "States need room financially for this, which they should
get under the condition that they really will reform."
Existing EU rules allow for slower budget consolidation if a
country makes investments or undertakes structural reforms. But
policymakers worry that more time for deficit cuts may not bring
about the desired effects because reforms are postponed.
Their concerns were sparked by France, which was given more
time to meet its targets but has fallen short of expectations in
terms of reforms.
Germany under Angela Merkel has been an ardent defender of
budget austerity, making Gabriel's remarks particularly
striking. The coalition government of her conservatives and the
SPD has since stressed that Gabriel was not implying that the
rules needed to be changed.
(Reporting by Alexandra Hudson; Editing by Stephen Brown)