It's not that long ago that people in Brussels were afraid of Christian Lindner.

Shortly before the FDP politician became federal finance minister, the EU Commission said the EU could have a “real problem” with Lindner.

What was meant was that the prevailing opinion in Brussels that at the end of the corona pandemic as much as possible had to be done for growth and (government) investments and less for debt reduction could be endangered by Lindner.

The new minister could prevent the easing of EU budget rules, which is being pursued primarily by France and Italy.

Werner Mussler

Business correspondent in Brussels.

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Lindner has so far tried to dispel such fears by appearing in a binding manner.

When he recently met his EU counterparts for the first time, he left open the extent to which he could agree to a reform of the EU Stability Pact.

The minister's signals from the weekend were all the more attentive on Monday in Brussels.

There was the appointment of the former “business wise man” Lars Feld to the minister’s “chief economist”.

Feld is regarded as an advocate of a strictly rule-oriented financial policy and as a co-inventor of the debt brake in the Basic Law.

And there were statements by Lindner in the “Handelsblatt”.

He is in favor of a "binding path to reducing debt ratios in Europe" and against changing the Maastricht limits for public debt (60 percent of economic output) and for the public deficit (3 percent), he said.

realistic plans

What sounds like a strict line in the ongoing discussion about the pact reform is of course part of what the EU Commission will probably propose in the summer anyway.

EU diplomats rule out a change in the Maastricht criteria, even though government debt in the euro area has now climbed to around 100 percent of economic output.

The reason is simple: the Maastricht limit values ​​are part of the EU treaties.

Changing them would require changing them (unanimously), which is politically unrealistic.

And EU Economic Commissioner Paolo Gentiloni also has in mind the definition of binding "reduction paths" for the public debt, which has risen sharply again during the pandemic.

In December, the Italian suggested in the FAZ that

These plans must be "realistic," says Gentiloni.

By this he means above all that highly indebted countries like Italy (with a current debt ratio of around 155 percent of economic output) should be given the space and time to reduce debt.

The current rule that states in debt have to reduce the difference between the current level of debt and the Maastricht limit by one twentieth every year would be abolished.

It's actually unrealistic.

If it were applied, Italy, for example, would have to reduce its debt by almost 5 percentage points a year.

The EU Commission has never consistently applied this twentieth rule and has always pointed out that it can be applied flexibly.

This corresponds to the previous Berlin line, which was also laid down in the coalition agreement.

Accordingly, one does not have to change the set of rules because it can already be interpreted very flexibly.

However, this argument can also be turned around: there is nothing politically opposed to refining the pact by defining country-specific "reduction paths" and, for example, obliging Italy to reduce its debt by ten points in ten years.

In the German reading, the obligation to reduce debt would be formulated more bindingly, in French or Italian the indebted countries would get it in writing that they would be spared the Brussels yoke of apparent austerity for the time being.

Violations of the rules would be punished just as little as before.

In this respect, the discussion about the reform of the pact increasingly developed into a dispute about the emperor's beard.

For Lindner, this means that he can appear in Germany as a defender of the stability pact without smashing European porcelain.

"For a long time now, the discussion has had nothing to do with the economic core of the debt problem," said an EU diplomat.

The content of the pact does not decide on the sustainability of the debts in individual euro states.

“In the end, it all comes down to the financial markets.

We had that before – in the euro debt crisis.”

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