No one appreciated the irony more than Klaus Regling.
As head of European financial relations at the German Finance Ministry in the mid-1990s, Regling helped write the Stability and Growth Pact, which sets a budget deficit ceiling of 3 percent of GDP for euro-zone countries. Last year he was appointed director-general of economic and financial affairs at the European Commission , the civil servant in charge of recommending that the commission take the politically risky step of warning Berlin about its rising deficit.
The idea that Germany , rather than, say, a Mediterranean country , would be hit by the deficit restrictions “was clearly not on my mind” when writing the pact, Regling says. Nor, for that matter, did he foresee the bruising he got last month, when aides to Chancellor Gerhard Schröder, a Social Democrat, suggested that Regling had political motivations because he had served under the previous, Christian Democratic Union government.
For the record, Regling states emphatically that he has never been a member of the CDU. And European Union officials say he played a vital role in forging the compromise that allowed Germany to escape a warning by pledging to bring its budget close to balance by 2004. “He knows the Stability and Growth Pact inside and out,” one official says. “This was a big advantage.”
Regling defends the compromise and says the showdown between Brussels and Berlin dramatized the seriousness of Germany’s budget plight far more than a warning would have.
And he remains an adherent of the stability pact. “If you told me five years ago that eight countries would have their budgets in surplus or balanced, I would not have believed it,” Regling says. “That shows that a lot has moved in Europe.”
