Europe ministers meet over euro turmoil

EU finance ministers opened a two-day meeting yesterday, determined to stand by their euro at a time of political turmoil over the French and Dutch rejection of the European constitution and Britain’s decision not to put it to a vote.

The common currency took a dive following ’no’ votes in the Netherlands and France, and ministers in some euro-zone governments questioned if the euro should be dropped.

The European Central Bank has been at pains to defend the currency, and EU diplomats said the finance ministers planned to echo the view of ECB President Jean-Claude Trichet, who has called it “absurd” to speculate about the euro’s demise.

Austrian Central Bank Governor Klaus Liebscher – who is also a member of the European Central Bank’s governing council – went in to bat for the euro yesterday in an unusual advertisement in the Austrian newsweekly Profil.

“A common market without a common currency would have remained just a torso. The euro itself has been effective,” the ad said.

Some Italian government ministers have publicly called for a return of the lira, criticising the ECB’s one-size-fits-all interest rate policy and blaming the currency for higher prices.

Luxembourg Premier Jean-Claude Juncker, whose country holds the EU presidency, and German Finance Minister Hans Eichel dismissed the idea of reviving currencies that were withdrawn from circulation in 2002, making room for the euro.

“What I read in the newspapers in the last 10 to 14 days (about the euro being in danger) was such nonsense,” said Eichel.

Juncker said the euro-zone finance ministers’ meeting, which he chaired, would not discuss “such stupidities … We have no time to waste.”

Eichel reiterated that with the fate of the EU constitution in the balance, it was important that the leaders agree next week on a new EU funding deal in the 2007-2013 period.

“Germany has signalled it is ready to move but that does not change our basic view” that annual spending cannot exceed 1% of the EU’s gross national income, said Eichel.

Five others – Britain, France, the Netherlands, Sweden and Austria – agree with Germany while East European nations and Spain want a much higher spending cap.

The ministers’ agenda is packed with other issues, ranging from a proposed redesign of euro coins – to show a larger map of Europe following the bloc’s expansion last year – to a new European commitment to boost development spending for the world’s poorest nations.