BERLIN ROME, Oct. 18 Reuters - One is the German conservative who insisted the euro be based on tough budget rules; the other was an Italian centre-left who famously attacked those rules as stupid. With the European Union embarking on major reform of its Stability and Growth Pact of Fiscal governance, Reuters conducted interviews with Theo Waigel and Romano Prodi, key players in 1999 birth of the Euro.
In the early 2000s, it was Waigel's duty to debug the national deficit and debt rules which former German Finance Minister Prodi had helped shape a few years earlier.
But coming from opposite ends of the European mainstream political spectrum, they were never likely to see eye-to-eye on those rules and how they should be enforced. Two decades later, the two elder statesmen still don't.
These are their historical perspectives on how the Pact worked and how it should be changed.
Waigel: All members have profited from monetary union, including the weaker countries The Stability Pact was the answer to the fact that sustainability is not only necessary in climate and fiscal policy but also in fiscal policy. It is not a question of a country who fulfils the criteria for one year or two. It must be permanently in the case to avoid friction. It was a stupid instrument because it didn't have any economic foundation, which is why I called it defective It was useful as a warning for countries not to overspend but it was clear that it became a problem when exceptions were made It then can't be applied. It's called the stability and growth pact, so in future it must not only put the accent on stability but also of growth I would suggest three things: increase the flexibility; give special treatment for investments that increase productivity and also give special treatment to investments needed to reach our climate goals. Waigel: It would be a mistake to relax the rules now. This is also to be my warning to the new German Federal Government. The Stability Pact requires sufficient flexibility, it does not need to be relaxed In fact, because of the huge demographic changes taking place, we need surpluses in our national budgets. Prodi: Reaching net zero in 2050 is an ambitious target which will need huge investment to modernise our industries. This is one thing to be considered under the new rules: Waigel: Germany has refrained from the demand to exclude the costs of its 1990 reunification, even though it has spent 4 to 5 percent of its economic output annually on it. If the world can handle such a challenge, countries will have to deal with the rules as well. Edited by Toby Chopra and Rehani Mark John.