Ecofin agenda includes prices, markets, debt

Developments related to the war in Iraq overshadowed the meeting of the Council of European Finance Ministers (Ecofin) which began in the Athens suburb of Vouliagmeni yesterday. The meeting was originally scheduled for Hania, Crete, the hometown of the presiding minister, Nikos Christodoulakis, who is still undecided whether to stand for the Hania or the second Athens electoral district at the next election. News from the battlefield cheered financial markets yesterday, with US forces in control of the international airport on the outskirts of Baghdad. «The faster (the war) is brought to an end, the better it is (for the European economy). I think it’s going quite well,» Danish Finance Minister Thor Pedersen told reporters. The European Commission expects eurozone gross domestic product to expand by about 1 percent this year, provided that confidence returns later this year. This is a big if. The meeting will not only focus on Iraq, however, or even on Europe’s sluggish economic growth. It will also tackle issues such as inflation, the financial markets, the spring meeting of the International Monetary Fund and the imminent expansion of the European Union to include 10 new members. European finance ministers are concerned by the continuing large disparities in inflation among the 12 eurozone countries. These disparities are an indication that integration still has a long way to go and that some countries are much further along this road than others. Greece has the European Union’s third or fourth highest inflation, running at over 4 percent, almost double the eurozone average. Despite the economic slowdown, however, the European Central Bank insists on the goal of price stability, that is, average annual inflation at 2 percent or lower. The ministers will also discuss the current crisis in European stock markets, where indices hover at five- and six-year lows. Further integration of market oversight practices and share transaction procedures will also be discussed. The spring IMF meeting in Washington will discuss the restructuring of state debt and the role of the private sector in dealing with financial crises. The interest is not only academic: EU members would like, in theory at least, to see a large part of the developing countries’ debt written off. Finally, the ministers will discuss today how Ecofin will operate after the EU expansion, when member states will number 25 instead of 15.