BERLIN, Jan 17 — The EU should continue to suspend strict fiscal rules to help debt-mired countries like Italy until the pandemic is over, the new chairman of the German parliament’s powerful EU affairs committee told AFP today.
Anton Hofreiter, a senior Green party MP, said Rome in particular deserved leniency as it finds its feet again after the blows levelled by Covid-19.
That flexibility should also extend to countries making ambitious expenditures in climate protection, he added.
Asked how the EU should help struggling countries, Hofreiter replied, “by continuing to temporarily suspend the Stability Pact because we’re really in a very special crisis”.
“We don’t know how long the corona crisis will continue,” he said, sounding a more conciliatory note than new chancellor Olaf Scholz of the centre-left Social Democrats.
“Under (Prime Minister Mario) Draghi, Italy has done a lot of things well in recent months. No one has an interest in it sinking even deeper into an economic crisis.”
The European Union suspended its fiscal discipline rules in 2020, allowing eurozone members to boost their public spending in response to the pandemic.
Italy’s public debt soared to 155 per cent of its GDP — more than double the EU’s 60 per cent ceiling — and Brussels has expressed concern that it is still budgeting to spend too much this year.
‘Smart proposal’
Hofreiter said his party, junior partners in Germany’s ruling coalition along with the pro-business Free Democrats, said proposals for allowing greater investment in “green” projects were “very smart”.
Nevertheless, he said, some of the planks of the bloc’s Stability and Growth Pact, which dictates rules on debt and public deficits, “stand in the way of the Green Deal”, which aims to make the EU climate neutral by 2050.
French President Emmanuel Macron, whose country holds the rotating EU presidency, has joined forces with like-minded leaders such as Draghi to urge Brussels to reform its fiscal rules to allow greater investment spending while still managing debt levels.
Scholz, however, has tacked closer to Angela Merkel’s previous course of enforcing at least long-term fiscal rectitude — a potential source of friction in the government’s first 100 days.
‘Geostrategically smart’
Hofreiter acknowledged other looming differences within the coalition, including the controversial Nord Stream 2 pipeline to carry Russian gas to Germany, as Foreign Minister Annalena Baerbock embarks on a mission to Kyiv on Monday and Moscow on Tuesday.
Scholz and his Social Democrats have maintained their support for Nord Stream 2 in the face of intense criticism from eastern European partners and Washington.
But the Greens are highly sceptical about what Hofreiter called a “problematic” project. Baerbock had said that the gas pipeline will not be allowed to operate if there were any new escalation in the Ukraine crisis.
“I think we have got to make sure that (Russian President Vladimir) Putin cannot continue to use the pipeline to apply pressure,” Hofreiter said.
“We have got to be clear about our own interests, both in terms of the climate as well as geostrategically.”
Nord Stream 2 is set to double supplies of cheap natural gas from Russia to Germany, which the EU’s top economy says is needed to help it transition away from coal and nuclear energy.
It was completed in September but Germany’s energy regulator Bundesnetzagentur has said the approval process is likely to drag into the second half of 2022.
Hofreiter said it was “geostrategically smart” to leave the issue unresolved “as long as possible”.
“Beyond the climate issue, if we were to simply say we approve this, we would be giving away leverage against Putin,” he said. “That would be unwise.” — AFP
