European Commission President Mr Romano Prodi today stood by his description of the pact underpinning the euro as "stupid", despite a flurry of comments in defence of the budget rules and a call for his resignation.
He said he would not change a word of a controversial interview which appeared yesterday in a French newspaper despite the fierce reactions to it, including the call by Germany's top conservative politician for him to quit.
"I did this with reason because you have to treat economic problems bearing in mind the actual situation," Mr Prodi said in Paris.
The Stability and Growth Pact has come under fire in countries such as France and Germany which are worried that its strict rules on euro zone member states' budgets may be too inflexible at a time when economic growth is hesitant at best.
The two euro zone giants are both in danger of exceeding the three percent of gross domestic product which the pact sets down as the maximum allowed for budget deficits.
Mr Prodi was today blamed for deepening the crisis surrounding the stability pact.
In Germany, newspaper comment referred to these "unspeakable words" and warned that the euro was now in danger of becoming "mere paper", while in The Hague, Trouwnewspaper quoted Dutch Finance Minister Mr Hans Hoogervorst as describing the remarks as "incomprehensible".
Mr Edmund Stoiber, Germany's conservative opposition leader, said "What Mr Prodi said yesterday clearly disqualifies him as president of the European Union".
The Financial Times, in a front page story headlined "Disbelief at Prodi attack", said the comments "could mark the beginning of the end for the EU's stability and growth pact".
Britain's Guardiannewspaper said Mr Prodi had delivered "a crushing blow" that had "depressed the euro to a one-month low" and "sounded like a requiem for the rulebook".
The French Les Echosnewspaper claimed Mr Prodi was seriously "at fault" in describing the pact as "stupid" and rigid, but that euro-zone states, principally France and Germany held a "major" part of responsibility.
The International Herald Tribunereported analysts as suggesting that Mr Prodi had spoken more out of frustration that the Commission, charged with overseeing respect for the pact, had no authority over spending by euro-zone governments, and it noted that on Wednesday Germany had said it would probably violate the rules this year.
On Wednesday, the European Commission said the budget deficits in France, Germany and Italy were close to or above the European Union limit of three per cent of output and the EU's budget policy faced "critical months".
Germany has already admitted it will most likely breach the deficit limits.
Yesterday, Mr Prodi's spokesman Mr Jonathan Faull said the Commission president was in fact arguing against an over-zealous interpretation of the stability pact.
"What would be stupid would be a rigid, dogmatic implementation of the pact which took no account of the economic realities of the situation," Mr Faull told a news briefing.
"The Stability Pact implemented in a flexible way is - the president has said this and he said it again - the cement of our economic policy," he added.
Additional reporting by Reuters
