EU budgets- Stability or stupidity(ZZ)

BRUSSELS, Belgium -- European Commission President Romano Prodi on Friday

stood by his description of the pact which underpins the euro as "stupid'' as

politicians and central bankers rushed to defend the budget rules.



Prodi's spokesman said in Brussels that he would not change a word of a

controversial interview which appeared on Thursday in a French newspaper

despite fierce reactions to it, including a call from Germany's top

conservative politician for him to resign.



"The president does not regret one word of his interview with Le Monde, which

is very clear,'' spokesman Jonathan Faull told a news briefing.



The Stability and Growth Pact has come under fire in countries such as France

and Germany which are worried that its strict rules on euro zone member

states' budgets may be too inflexible at a time when economic growth is

hesitant at best.



The two euro zone giants are both in danger of exceeding the three percent of

gross domestic product which the pact sets down as the maximum allowed for

budget deficits.



Greek Finance Minister Nikos Christodoulakis, who chairs meetings of the

so-called Eurogroup of euro zone finance ministers, said on Friday he regarded

the pact as "a very essential tool for fiscal stability.''



Stability Pact 'like Christianity'

Dismissing differences of emphasis on the Pact, he added: "The Stability and

Growth Pact is sometimes like Christianity -- we have the Orthodox, we have

the Catholics, we have the Protestants -- but we believe in the same God.''



A fiercer reaction to Prodi's remarks came from Edmund Stoiber,墨尔本华人, the

centre-right German politician who last month came within an ace of wresting

the Chancellorship from Gerhard Schroeder at the federal election.



"What Mr Prodi said yesterday clearly disqualifies him as president of the

European Union,'' Stoiber, premier of the state of Bavaria, told German ZDF

television.



"He's wasted any remaining trust in the European Commission in Europe.''



Austrian central banker Klaus Liebscher also criticised Prodi and defended the

pact, which Germany originally insisted must accompany the launch of Europe's

single currency if the new unit was to hold its own on the foreign exchanges.



"I hope that Prodi's comments were misunderstood,'' he told reporters in

Vienna.



"There has to be a reasonable budget policy that limits the countries in their

spending,'' Liebscher, a member of the European Central Bank's governing

council, earlier told a business conference.



He added that the pact's rules are clear and that any country which breached

them must be penalised, a reference to the provisions, so far never used, for

fining countries which run excessive deficits.



Prodi's spokesman Faull again used the word "stupid'' in defending his boss's

description of the pact.



"He stands completely by his line which is that the pact should be applied

intelligently, that it should take account of the economic realities of our

economies and that rigidities are stupid,'' he said.



He added that Prodi did not intend to accept an invitation from members of the

European Parliament for him to come to the assembly next week to clarify what

he said in his Le Monde interview.







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