MercoPress. South Atlantic News Agency

Trichet warns Europe about reactions to crude prices crisis

The European Central Bank president Jean-Claude Trichet set the tone at the ECB's 10th anniversary event by warning that bad management of the oil crisis in the 1970s (meaning large wage rises and low interest rates) seriously hurt the economy and jobs, and that the errors of the past must not be repeated. “This anniversary is no time for complacency,” Trichet said.

Meantime truckers blocked a refinery in France and slowed traffic on several major roads with support from taxi and ambulance drivers in the latest of protests across several European countries. Feeling the heat, France called on ministers to think about a European-wide cap on the VAT sales tax levied on fuels, an idea floated last week by President Nicolas Sarkozy. That got short shrift from others who feared tax cuts would pitch countries into a tax-slashing race that ultimately plays into the hands of oil producers, and not the oil-consumer countries of Europe. Austria suggested a tax on speculative commodities trading. Despite the protest, most ministers at the Euro zone talks said governments could not and should not slash taxes or condone big wage rises to compensate for price hikes, warning this could turn a perhaps short-term problem into a long-term one. Instead, meeting chairman Jean-Claude Juncker, Luxembourg's prime minister, said ministers had set themselves the deadline of an EU summit on June 19-20 for European capitals to come up with highly targeted relief measures for the most needy. The ministers held talks on the matter at ECB headquarters before heading off to ECB birthday celebrations at a Frankfurt opera house, also being attended by central bankers and guests including German leader Angela Merkel.