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Between a rock and a hard place

Posted by Richard Wednesday, August 25, 2004

The expected row over Barosso's plans for an increased EU budget is beginning to simmer away nicely, with outgoing budget commissioner Michaele Schreyer taking a swipe at Germany for wanting to limit EU spending to one percent of gross national income.

An outraged Schreyer has told the German newspaper Die Welt that, "When you want to limit expenditure to 1 percent, you have to say which kind of EU policy you want to give up." Not entirely without logic, he added "Deciding all the time to take on new tasks, setting grand objectives to Europe, and then disputing the funding - this does not work at the EU level either."

Yet, even as Schreyer was speaking, in came the news that Germany's public deficit had soared to a massive 4.0 percent of gross domestic product (GDP) in the first six months, taking the country dangerously close to breaching the European Stability and Growth Pact for the third year in a row.

With that, leading politicians of the Christian Democratic Union/Christian Social Union (CDU/CSU) and the Social Democratic Party (SPD) are adamant that they will not accept an increase in the German contribution. If Barroso's planned increase to 1.14 percent of GDP goes ahead, that will add another 13.5 billion euros to Germany's EU bill.

SPD Chairman Franz Muentefering has simply stated that any increase is "out of the question". He is appealing to the länder for support, in the hope that they would block any deal in the Bundesrat, if Schröder does cave in.

Luckily for Schreyer, he will not be around when the battle comes to the boil. In his place from 1 November will be the unfortunate Dalia Grybauskaite, who will be expected to bear the brunt of Germany's wrath while keeping her new boss sweet. She will need all the skills she acquired as minister of finance for her home country of Lithuania but, in the final analysis, she is being presented with an impossible job.

Not for the first time is a Lithuanian politician being presented with the choice between a rock and a hard place, although historically the squeeze was between Germany and Russia. Now it is between Germany and the EU commission. I suppose that is progress, of a sort.