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Europe

Hollande warned not to meddle with EU pact

Text by News Wires

Latest update : 2012-05-12

European Central Bank policymaker and Bundesbank chief Jens Weidemann warned Francois Hollande on Saturday against meddling with the EU's fiscal pact. France’s president-elect had vowed to renegotiate the treaty as one of his pre-election promises.

AFP - Bundesbank president Jens Weidmann warned French president-elect Francois Hollande on Saturday against tampering with the European Central Bank or the EU fiscal pact.

He also reminded Greece that it would have to respect its commitments or risk having its bailout aid suspended, in an interview with the daily Sueddeutsche Zeitung.

"Any modification in the statutes (of the European Central Bank) would be dangerous," Weidman said when asked about Hollande's proposal during his electoral campaign to allow the ECB to take measures to support the economy or lend directly to states.

"Jobs and economic growth are the result of trade. The central bank is best placed to contribute to the stability of the (European) currency," he said.

With regard to Hollande's campaign pledge to renegotiate the European fiscal pact, he said "it is clear that must be refused."

"There is a European custom that you keep to accords you have signed," he said.

His comments come ahead of Hollande's visit to Berlin next week, when he is to have talks with Chancellor Angela Merkel on Tuesday evening.

Hollande said in his campaign that he would advocate measures to kickstart Europe's sluggish economies.

Weidmann said: "I know the new buzzword is 'growth'... all experience has shown that too much debt is a handicap to growth. To combat debt with more debt just will not work."

On inflation, he stood firm. "It is a dangerous path, we must not repeat the errors of the 1970s. Inflation is socially unfair and will not get us out of the crisis."

With regard to Greece, he said there was "no German economic diktat. But if Athens doesn't keep its word, it will be a democratic choice. The consequence will be that the basis for fresh aid will disappear."

Date created : 2012-05-12

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