Waigel denies "fudge" on EMU rules

THE German Finance Minister, Mr Theo Waigel, yesterday issued an at best half hearted denial of comments attributed to him that suggested Germany might still press to be included in the euro even if it missed the Maastricht 3 per cent deficit target this year.

Mr Waigel's denials were echoed by Bundesbank president Mr Hans Tietmeyer who stated that he had heard of no change in German policy towards EMU at the Noordwijk weekend meeting of finance ministers.

The Bundesbank president also denied newspaper reports alleging Germany had softened its position on the entry criteria for currency union.

"When I was in Noordwijk, and I was there, I had not heard of any change," Mr Tietmeyer said in response to a question whether there had been any softening of the German position on EMU criteria.

A spokeswoman for Mr Waigel said that the press reports "were unfair in the highest degree" and that the remarks had been "humorous" but not understood as such. Mr Waigel, the spokeswoman said, is "a very humorous man".

When questioned over the weekend as to what would happen if Germany exceeded the 3 per cent qualification limit Mr Waigel was quoted in the British media as saying that he "would not be nailed to the cross of 3 per cent". The euro could not just be set aside, he had said, because of the implications for German exporters of the likely consequent massive upward pressures on the mark.

But reporters who attended Mr Waigel's weekend briefing were yesterday adamant that the comments were fairly reported. And several major German papers, although not quoting Mr, Waigel directly, carried stories suggesting a significant shift in the German position on the interpretation of the 3 per cent requirement.

German journalists believe that the Bonn denial was probably largely a response to a Financial Times headline suggesting Germany was "weakening" its position. And observers here insist that even if Mr Waigel may have inadvertently let his guard down in an informal setting, the thrust of the comments is a genuine reflection of Germany's, strong political will to see the euro introduced on time.

The Maastricht Treaty provides for admission to the euro of currencies from states whose deficits do not exceed 3 per, cent except where such a breach is due to exceptional and temporary conditions in Bonn's case the costs of German unification clearly would provide an argument for it to be considered as exceptional.

"Our position has not changed. We are for a strict application of the criteria," Mr Waigel's spokeswoman stressed yesterday. Mr Waigel himself, speaking at a meeting of his Christian Social Union in Munich, also insisted "3 per cent means 3 per cent, and we're sticking to that. There is no room for interpretation."