BRUSSELS – ECB Governing Council member Nout Wellink said in an
interview published on Thursday that the European Union’s Stability and
Growth pact should be made even tougher, backed up with sanctions, and
that France and Germany have not gone far enough in that direction.

Wellink, who heads the Dutch National Bank, told the Dutch
publication Vrij Nederland that the euro was an “enormous asset” during
the global financial crisis. He likened it to a “big tanker,” adding
that “the chance is greater that you come back stronger after the

Wellink took a swipe at France and Germany, saying: “If there is
one lesson to draw from all of this, it is that the Stability Pact
cannot be hard enough. But Germany and France have once again not taken
the ultimate step towards a much stronger pact…If countries try to
escape their commitments, then they should be sanctioned.”

Wellink argued for a big step in the direction of federalism,
floating the idea of a European Finance Ministry that would work in the
same way as the U.S. Treasury. “There, only the central budget can be in
deficit; states’ may not be,” he noted.

However, he acknowledged that this would be difficult. “”Member
states do not trust Europe. They think that if they give Europe room to
be able to have deficits then it will turn into chaos,” he said. “If
there is disagreement, as between [Dutch] and the Belgian authorities in
dismantling ABN Amro and Fortis, there are no rules on how the burdens
are distributed. And as long as they are not, we will still continue to

EU leaders meeting in Brussels today and tomorrow will be focusing
on an agreement to establish a permanent crisis mechanism. Fiscal
surveillance also features on their limited agenda. The weeks leading up
to the summit have been marked by strong disagreement among its
participants, with Germany shooting down proposals to issue joint
“Eurobonds” and to inject more capital into the European Financial
Stability facility.

And that was after Germany — much to the chagrin of the ECB and
other Eurozone officials — had accepted a French proposal to
essentially water down a planned reform of EU fiscal rules and

Wellink criticised German chancellor Angela Merkel for her
“unfortunate” comments regarding the Eurozone.

“I understand that she doesn’t always want to go to the taxpayers
for things that go wrong elsewhere, but if you say [what she's said] at
a time when a country which is struggling needs to stay afloat and
refinance, then you know that investors will say ‘Get out. Soon we will
have to pay for the damage.’ So her timing, to put it politely, is

Wellink also lamented Merkel’s comment that the euro was in a
“serious situation.” He said that such a comment is “advantageous in
German politics, but [she] doesn’t realise apparently what the economic
consequences would be. If Germany left the euro, the exchange rate would
skyrocket. Everyone would run to the new [German] currency, and the
Germans would find it very hard to export.”

Asked his opinion about which country in Europe would be next to
seek a bailout, Wellink suggested it wasn’t a foregone conclusion that
other countries would necessarily be forced to seek aid. “There are many
stories that do not have this ending,” he said. “We tried with Ireland
to make [the crisis] stop with a strong austerity package. What the
future brings, has always been in the lap of the Gods.”

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