ECONOMY

No risk of recession, say European finance ministers

European finance ministers admitted yesterday the war in Iraq was not the only obstacle to recovery in their faltering economies, but denied there was a risk of recession. «I do not think such a danger exists,» Greek Finance Minister Nikos Christodoulakis told reporters as he arrived to host a two-day meeting of EU finance ministers and central bank governors in Athens. They hope to inspire confidence in their economies by presenting a united front at the gathering, which is also expected to ask European Central Bank President Wim Duisenberg to stay at his post past a planned July 9 retirement date. Duisenberg will be asked to stay on to resolve uncertainty about the job because his heir-apparent, Bank of France Governor Jean-Claude Trichet, is awaiting a June 18 court verdict in connection with the Credit Lyonnais banking scandal. French Finance Minister Francis Mer said that the Dutchman could be asked to remain in place «a bit longer» than September. Duisenberg has indicated that he will accept such an invitation, designed to ensure a smooth transition in this high-profile post during a delicate period for the region. European growth has been hit hard by the uncertainty caused by the US-led invasion of Iraq. But it was already in bad shape before the bombs began falling on Baghdad and many of the region’s problems have been homemade. «I believe that the problems that Europe has at this moment… do not have much to do with the geopolitical conflict but with Europe’s growth (potential) ability,» Spanish Finance Minister Rodrigo Rato told reporters. Luxembourg Prime Minister Jean-Claude Juncker said that if the war lasted for a long time and resulted in a strong rise in oil prices, the EU and the eurozone would have to coordinate actions closely. «In the case the war takes too long… and in case we experience a major increase in oil prices, we will have to develop coordinated action in the European Union and in the euro area, to avoid that governments are moving in the opposite directions,» he said. This was a swipe at unilateral action by some EU members, including France, during an oil price spike in 2000 when they subsidized fuel prices to mollifying angry truckdrivers. Duisenberg attended the two-day meeting in the affluent Greek seaside suburb of Vouliagmeni. He declined to answer questions as he arrived. But Juncker said there was general consensus among finance ministers to ask him to stay at the ECB helm. Austrian Finance Minister Karl-Heinz Grasser said he also expected the meeting to reach at least an informal decision on who will fill the ECB board seat when Finland’s Sirkka Hamalainen, the only woman on the six-member board, finishes her term at the end of May. Austrian deputy central bank chief Gertrude Tumpel-Gugerell is tipped as a front runner for the job.