Chapter 12: The convergence farce: smokescreens and denial
The convergence criteria specified under Article 109j(1) (Maastricht Treaty, 1992) relating to inflation, interest rates and exchange rate stability were clear and most of the contending nations were likely to have satisfied them as the deadline approached. The sticking point, however, was the rules under Article 104c and Protocol 5, which related to ‘excessive deficits’. The excessive deficit criterion, outlined earlier, was clearly tripping a number of nations up, including Germany. In 1997, France, Germany and Spain had deficits above 3 per cent and could not really appeal to the special circumstances clauses as a way out. Further, the public debt ratios in Germany and Spain were above the 60 per cent threshold and had been increasing since 1995. By contrast, although Italy’s public debt ratio was well in excess of the criteria, it had been falling. Further, Belgium was in a similar situation to Italy. Tactically, Germany could not isolate Italy without pleading some special case for Belgium, which of course it attempted without success.
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