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MONEY

Spain says EU nations must be allowed to fix their own fiscal targets

EU budget rules must be reformed to let member states define their own fiscal targets tailored to "the specific circumstances of each country", Spain's economy minister said Monday.

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Spain's Deputy Prime Minister and Minister of Economic Affairs Nadia Calvino addresses a press conference following a meeting with the Irish Minister for Finance and President of Eurogroup, in Madrid on February 7, 2022. (Photo by OSCAR DEL POZO / AFP)

Under terms of the EU’s Stability and Growth Pact, member states must keep their budget deficits under 3.0 percent and overall debt under 60 percent of GDP, although occasional adjustments are possible.

“The current ratios of public debt to GDP are much higher than before the pandemic in all countries of the EU,” said Nadia Calviño during a round table in Madrid with Paschal Donohoe who currently heads the Eurogroup of eurozone finance ministers.

“Therefore, the path for public debt reduction must be adapted to this new reality and take into account the specific circumstances of each country,” she said, calling for swift action to change the budgetary rules.

The pandemic has caused soaring levels of debt, which in France had risen to an estimated 115 percent of GDP by the end of 2021, and almost 122 percent in Spain, rendering the targets almost impossible without tough austerity measures.

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Spain’s Deputy Prime Minister and Minister of Economic Affairs Nadia Calvino (L) and Irish Minister for Finance and President of Eurogroup Paschal Donohoe address a press conference following their meeting, in Madrid on February 7, 2022. (Photo by OSCAR DEL POZO / AFP)

In order for the European Union to avoid making the same mistakes of the 2008 financial crisis, “member states must play a leading role in setting their own fiscal targets,” Calviño said.

Brussels had urged member states to quickly get back on track to avoid a ballooning of public debt. But experts say the rush to impose austerity hampered the bloc’s recovery and caused long-term damage to its economy.

“We’re all aware of the lessons from the past crisis,” admitted Donohoe, who is also Ireland’s finance minister.

That was why it was necessary to find “the balance between debt sustainability and how to fund growth and investment”, he added.

There is an ongoing debate about the future of the EU’s fiscal rules which have been suspended until 2023 due to the pandemic, with some countries like France, Italy and Spain pushing for reform to allow more flexibility.

But others are reluctant to push through changes, with Germany’s new finance minister insisting last month on the need to reduce the EU’s sovereign debt.

Member comments

  1. We saw what with austerity when it was tried the first tine, reaction from the public can be very severe.

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NATO

Spain and Mali foreign ministers speak after row over NATO remarks

Mali's Foreign Minister said Saturday he had spoken with his Spanish counterpart after a row over comments the Spaniard made about the possibility of a NATO operation in the African country.

Spain and Mali foreign ministers speak after row over NATO remarks

Mali’s Foreign Minister Abdoulaye Diop wrote in a tweet that he had spoken by phone with his Spanish counterpart Jose Manuel Albares about the comments, which were made in a radio interview.

“He denied the remarks and expressed his attachment to friendly relations and cooperation with Mali,” wrote Diop.

Spain moved to calm the row Saturday, a day after a day the military regime in Bamako had summoned their ambassador for an explanation.

“Spain did not ask during the NATO summit or at any other time for an intervention, mission or any action by the Alliance in Mali,” said a statement from Spain’s embassy.

The row blew up over remarks by Albares in an interview Thursday with Spain’s RNE radio. Asked if a NATO mission in Mali could be ruled out, Albares said: “No, we can’t rule it out.”

“It hasn’t been on the table at the talks in Madrid because this is a summit that is laying out, so to speak, the framework for NATO action.”

“If it were necessary and if there was to be a threat to our security, of course it would be done,” he added.

Albares was speaking on the sidelines of the NATO summit as it drew to a close in Madrid. Diop had told state broadcaster ORTM on Friday that Bamako had summoned the Spanish ambassador to lodge a strong protest over the remarks.

READ ALSO: Nato apologises after hanging Spanish flag upside down at Madrid summit

“These remarks are unacceptable, unfriendly, serious,” said Diop, because “they tend to encourage an aggression against an independent and sovereign country”.

“We have asked for explanations, a clarification of this position from the Spanish government,” he added.

At the Madrid summit, Spain pushed hard to prioritise the topic of the threat to NATO’s southern flank caused by the unrest in the Sahel — the vast territory stretching across the south of Africa’s Sahara Desert, incorporating countries such as Burkina Faso, Chad, Mali, Mauritania and Niger.

Jihadist attacks there are pushing increasing numbers of people to flee north towards Europe, with Spain one of the main points of entry there.

READ ALSO: Spain’s capital ramps up security to host Nato summit

At the summit, NATO acknowledged the alliance’s strategic interest in the Middle East, north Africa and the Sahel.

Mali has since 2012 been rocked by jihadist insurgencies. Violence began in the north and then spread to the centre and to neighbouring Burkina Faso and Niger.

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