Control deficiency with sanctions, says Germany (AFP)

Berlin (AFP)-European Union States which do not respect the rules agreed on their deficits should have their frozen EU subsidies, Finance Minister of Germany said in an interview to be published Sunday.

"We would quickly filter out the rate of European funds" to countries whose deficits exceeded the amount allowed, Wolfgang Schaeuble told the newspaper Frankfurter Allgemeine Sonntagszeitung.

The European Union's 1997 Stability and Growth Pact requires members of the block to maintain fiscal discipline, in particular by holding the annual public deficit under 3.0% of total production and to work towards securing surpluses in times of strong growth.

Euro-zone countries are struggling with a debt crisis partly caused by the failure of some Member States to respect the limits set by the Pact.

Schaeuble argued that the EU does not have to wait in the future for the situation to get out of hand.

But at the same time he rejected the idea that Greece would have to leave the euro zone.

"The eurozone would suffer an irreparable loss of confidence if only one of it members left the Monetary Union," he warned.

"I don't even want to try to imagine what it would be if the markets realized that they can expel a country from the euro area," he added.

The EU is currently looking to strengthen its sanctioning methods that States demonstrate budgetary discipline enough.

Several euro area countries have called for tougher sanctions in exchange for support of rescue packages for Greece, Ireland and Portugal to avoid default.

The European Parliament has also considered fine countries running large deficits.

Euro-zone countries in March on the broad outlines of a plan to control the deficit, but the Member States, has tried to limit the scope of any automatic sanctions, hoping to retain some political flexibility.

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