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Ireland faces EU reprimand |
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February 12, 2001
BRUSSELS, Belgium (AP) — Ireland, one of Europe's most thriving economies, faces another dressing down from the European Union over worries that the country's fiscal policies are stoking inflation and weakening the euro. Finance ministers from the 15 EU states were expected to endorse the EU executive body's censure of Ireland's 2001 budget at their regular monthly meeting Monday. The unprecedented reprimand aims to persuade Dublin to backtrack on $470 million in tax cuts and generous increases in social spending. The 12 EU countries using the euro have pledged to adhere to strict fiscal guidelines and common economic aims so as to promote stability within the euro zone. But there are no penalties other than peer pressure to keep a country in line. The European Commission issued its first-ever censure on Jan. 24, warning that Ireland should not be stoking its Celtic Tiger economy when its 5.9 percent annual inflation is the highest in the EU and well above the 2 percent euro-zone target. While Ireland, with only 1 percent of the EU population, does not have a major impact on the overall European economy, European Central Bank President Wim Duisenberg said the primary motivation for the reprimand was to avoid setting a precedent: If Ireland is allowed to flout the rules, he said, it would be difficult to discipline giants like Germany or France should it become necessary. Irish Finance Minister Charlie McCreevy has ruled out any budget changes and accused other EU states of ``casting green eyes of envy'' on Ireland's software-fueled boom, with 10 percent growth and unemployment near 4 percent. |