The European Commission has decided to ask the EU's highest court to overturn a decision by finance ministers to suspend the Stability and Growth Pact for France and Germany, writes Denis Staunton, in Strasbourg
The Commission said it would ask the European Court of Justice to fast-track the case and to deliver its judgment within a few months rather than in the normal two years.
The Commission President, Mr Romano Prodi, said that last November's decision not to apply the EU's budget rules to France and Germany had important political implications and he announced that the Commission would propose a reform of the pact next month.
The Minister for Finance, Mr McCreevy, said that the decision to go to court was a matter for the Commission and would not affect the Irish Presidency's handling of reports due in the next few months on how each member-state is fulfilling its budgetary obligations.
The Minister said in a statement that the Commission "had made it clear that they did not dispute the substance of the decisions taken by the Council on November 25th but rather were focused on the procedural issues involved".
Germany's Finance Minister, Mr Hans Eichel, condemned the Commission's move as the wrong approach to resolving its bitter dispute with EU finance ministers over enforcing the budget rules.
"Not least in view of the tasks faced by the European Union in the near future, it would be more helpful for the organs of the European Union to engage in co-operation rather than confrontation," he said.
The Commission made clear yesterday that its reform proposals could involve changes to the pact itself to allow greater flexibility, particularly to countries such as Ireland, which have low levels of public debt.
Mr McCreevy told European journalists in Dublin last week, however, that while he had no difficulty with discussing any Commission proposal for reform, he believed that most member-states favoured a period of reflection rather than immediate action on reform.
"They would like everybody to sit back, reflect and take it easy, and it is not good the whole time to be discussing changes to the pact," he said.
EU finance ministers agreed last November to suspend the pact's rules rather than impose binding commitments on France and Germany to take specific steps to reduce their budget deficits.
They decided instead to call on the two countries to bring their deficits below 3 per cent of GDP in 2005, warning that they could activate the pact's sanctions mechanism if Paris and Berlin failed to comply.
The 20 commissioners did not vote on yesterday's decision to launch a legal challenge to November's decision, despite misgivings expressed by some of their number. Ireland's Commissioner, Mr David Byrne, supported the action as a "legal imperative" in view of the Commission's role as guardian of the EU treaties.
Mr Byrne said, however, that the focus should be on reforming the pact on the basis of the proposals to be outlined by the Commission.
The president of the European Parliament, Mr Pat Cox, said that the Commission's legal action would do nothing to help the decision-making process in the EU and he backed calls for a reform of the budget rules.
"The real challenge is how to revise the pact's rules, so that in a low growth environment where you have public deficits, we can maintain a stability culture without stifling fragile economic growth.
"Reform of the stability pact rules will require considerable political investment and co-operation from all the EU governments and institutions," he said.