German fury as Waigel `cooks books'

Bonn plunders federal gold to meet Emu criteria
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The German government was accused of plunging the country into "unparalleled financial chaos" yesterday, as MPs vented their fury over Bonn's decision to rob the nation's piggy-bank.

Theo Waigel, the Finance Minister, was summoned to an emergency meeting in Parliament to explain his appalling miscalculation of public spending and the unorthodox remedy he was proposing.

Confronted with a hole of 18bn German marks (pounds 6.5bn) in the state coffers, Mr Waigel plans to raid the Bundesbank's gold reserves, using the proceeds to cut the country's deficit to levels prescribed by the Maastricht treaty.

"Waigel has arrogantly accused other European countries of manipulating their budgets to meet the Maastricht criteria," said the Social Democrats' finance spokeswoman, Ingrid Matthaus-Maier. "Now he is pulling the same stunt."

Details of the plan, described by various opposition MPs as a "conjuring trick," a "sleight of hand" and a "gimmick", still remained hazy yesterday.

"You have not mentioned a single figure," Ms Matthaus-Maier complained.

True, the only number uttered by Mr Waigel in his own defence was 50, the number of years it took the central bank to accumulate its wealth. So careful is the Bundesbank with its hoard, that most of the bullion is kept to this day in Britain and the United States, out of reach of any potential invaders from the east.

"The financial stability of the Bundesbank will be safeguarded," Mr Waigel vowed. But, under his orders, the central bankers must revise the paper value of their bullion, and hand over the paper profit thus accrued to the bankrupt state.

Somewhere along the line in this meandering journey, the fictitious sums will turn into real money, massaging government statistics just enough to allow Germany to slip into Economic and Monetary Union - Emu - through the back door.

The Finance Minister deserves to be pushed "out of a window for perpetrating such accounting tricks," said Oswald Metzger, a Green MP.

Gregor Gysi, leader of the East German post-communists, put the manoeuvre in a different context: "When the GDR resorted to these methods, the end was nigh."

"You are now the world champion of creative book-keeping," Joschka Fischer, the Green leader, told Mr Waigel, adding that the German Finance Minister should set up shop in Palermo.

Outrage over Mr Waigel's daylight robbery was by no means limited to the voices of the left. Apart from the faithfully pro-government Bild, which could not contain its admiration for the "Waigel-Wunder" (Waigel miracle), conservative commentators were horrified.

Metaphors about Pandora's box, the Nibelung hoard, and other images flooded in as the press digested the implications. The Frankfurter Allgemeine lamented the sorry state of a country which has to take such "grotesque" measures to qualify for monetary union. Germany, "once one of the most advanced and modern industrialised nations, has to grab for the myth of a gold hoard," the paper wrote.

"This would be cooking the books," commented Wilhelm Hankel, a former senior economic advisor to the government.

"Any private company that manipulates its profit figures loses the confidence of the banks and its shares collapse. What the German government is proposing is no different."

Through gritted teeth, the Bundesbank has put out a terse statement, remarking on the gaping chasm in Mr Waigel's figures but omitting to comment on what he was planning to shovel into it. But the gnomes of Frankfurt must be hurting.

At one stroke, they have lost much of their independence, some of their loot, and, more importantly, their confidence in the future.

The euro will come, but the new coins will be softer as a result of the latest machinations, tainted with the Bundesbank's stolen gold. Besmirched is also Germany's clean reputation. Never again will she be able to lay down the rules for honest book-keeping in Europe.