The FINANCIAL — According to EU business, France faces the tough task of piloting Europe past financial market turmoil and record oil prices when it takes the helm of European economic policy this week under a cloud of controversy.
French Finance Minister Christine Lagarde is to chair on July 3 the first meeting of her EU counterparts since Paris took over the rotating six-month presidency at the beginning of the month.
The talks are to focus in particular on what can be done to cool red-hot oil prices or at least ease their impact on consumers and tightening oversight of credit rating agencies.
No stranger to controversy when it comes economic policy in Europe, French President Nicolas Sarkozy already stirred up flaps even before the start of its EU presidency by criticising EU trade chief Peter Mandelson and floating proposals to cut sales tax on fuel.
Moreover, France is under pressure from its EU partners to ensure its public deficit will not breach European rules, putting Paris in an embarrassing position as its presidency of the bloc gets underway.
However, Lagarde will likely skirt controversy on July 3 by focusing on concrete responses to some of the biggest challenges facing Europe concerning economic policy.
In particular, Lagarde is to sound out other EU countries about bringing more transparency to oil markets by publishing weekly stocks data, which France has long recommended.
"The information that we get now is untimely and full of lacunae," said a senior EU diplomat, adding that an improvement would provide data "in real time and reflect stock levels as best possible."
Lagarde will find support from her EU counterparts for French plans to step up scrutiny of credit rating agencies by requiring them to register in Europe.
Draft conclusions of the meeting, obtained by AFP, said that measures so far were insufficient and that "further steps are needed and that regulatory changes might be necessary."
The ministers, according to their draft conclusions, backed the idea "that the rating agencies should be subject to an EU registration system."
Leading rating agencies Moody's, Standard and Poor's and Fitch have been blamed for playing a role in the financial sector turmoil over the last year by failing to highlight the dangers of debt instruments at the root of the problem.
In other business, the ministers are also due to drop disciplinary action against Poland following evidence that Warsaw has wrestled its public deficit down to EU norms.
With its deficit set to break EU rules, Britain on the other hand is likely to come under pressure from its EU partners to reduce its deficit to an EU limit of 3.0 percent of output by the 2009-2010 budget year.
The ministers are also due to give Slovakia the final greenlight to Slovakia to adopt the euro on January 1, 2009, giving the ex-communist country slightly less than six months to prepare for becoming the 16th member of the eurozone.
They could also set the definitive exchange rate between the euro and the koruna.
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