In an interview with business weekly WirtschaftsWoche, a sister publication of Handelsblatt, E.U. Commissioner Valdi Dombrovskis talked about southern Europe’s economic and budget challenges.
Mr. Dombrovskis, this summer the European Commission waived fines over excessive deficit. Does the E.U. Stability Pact still have any credibility?
It’s true we canceled the fines against Spain and Portugal. But it shouldn’t be forgotten that there are two types of sanctions. One is penalty payments; the other is the suspension of E.U. structural funds. And the final word hasn’t been spoken concerning the latter. The discussions between the European Commission and the European Parliament are still in progress.
Do you seriously believe these funds can be cut?
It is true there is no precedent for penalty payments. But we have already suspended structural funds once, specifically in 2012 for Hungary. Back then the Hungarian government promptly corrected its budget and made the necessary adjustments – whereupon we released the structural funds. So this instrument does work.
The Commission has been notoriously indulgent with large members in the past. France has to cut its deficit to below three percent in 2017. Is that realistic with a presidential election coming at the end of April?