MercoPress. South Atlantic News Agency

Euro zone calls for “responsibility” regarding US dollar

Euro zone Finance and Economy ministers called on “responsibility” from the United States regarding the steady revaluation of the Euro vs the US dollar, fearing the risk of monetary volatility to incipient economic growth in the European Union.

"The problem is being responsible" said French Finance Minister Francis Mer following the Brussels meeting and expressing the Euro zone ministers concern of the "excessive movements" in money exchange markets.

"We particularly express stability and we are concerned about excessive exchange rate moves", said the release which is the "basics" for the European position for the coming meeting of the G-7, February 6 and 7 in Boca Ratón, Florida that "we will be discussing with our friends the Americans, Canadians and Japanese", added Mr. Mer.

In spite of the fact many analysts believe the US can live with a weak dollar, as long as financial markets are not affected (as has happened so far), Mr. Mer indicated that this situation is "unsustainable in the long run", given the growing budget and trade deficits of the President Bush administration.

The effect to the competitiveness of the European companies has already being felt with the French aerospace industry complaining about a 25% drop in military aviation sales because of the strong Euro. Similarly last November Europe's trade surplus was slashed in half, a tendency that seems to be consolidating.

However, besides an all time high Euro against the US dollar, the EU still has to face an internal dispute regarding the Stability and Growth Pact since ministers agreed last November to ignore for a third year running a 3% GDP budget deficit limit involving France and Germany.

The dispute now also involves the European judiciary since the European Commission has appealed the ministers' decision, and in February the European Executive is expected to present coordination and stability reforms for a better effectiveness of the Euro Zone Growth Pact.

Tuesday evening a spokesperson from the US Treasury Department said that President Bush continues to support "a strong dollar" policy and "there are no changes" in that policy.