Wall Street Journal
February 5, 2011
Sharp disagreements opened up among European Union leaders at a summit here over a German-led plan to boost the competitiveness of weaker euro-zone economies, threatening to unsettle recently calm European financial markets.
The German proposals, backed by France, are viewed as the price for an agreement to expand a bailout fund for the struggling economies of the euro zone and give the fund greater powers to stem the region's debt crisis—a move seen as critical to restoring confidence in the euro.
But there was bitter criticism of the German proposals widely circulated beforehand in documents from the government. They advocate raising retirement ages across the euro zone, abolishing indexation of wages to inflation, harmonizing corporate and other taxes and instituting a "debt brake" that limits the ability of governments to borrow to fund their spending.
During unusually heated discussions, Belgium, Spain, Portugal and Luxembourg objected to the wage-indexation proposal, while Austria, in particular, criticized the plan to increase retirement ages. Austrians take wide advantage of early-retirement provisions, and, along with France and Luxembourg, the country has one of the lowest effective retirement ages in the euro zone.
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