EU is 'concerned' about Wolfowitz

Wolfowitz is a close ally of President Bush

EU finance ministers said they have "concerns" about the potential appointment of Paul Wolfowitz as president of the World Bank.

Calling him a serious candidate, they said that they wanted the opportunity to talk to him regarding his policies before he is confirmed in the post.

Earlier, they approved changes to the rules that underpin the euro.

The new rules will give governments greater freedom to boost spending in time of economic downturn.

World Bank concerns

The EU said that it wants to meet Mr Wolfowitz, who is a well-known White House hawk and was nominated by US President George W Bush.

He served as deputy defence secretary during Mr Bush's first term.

Luxembourg Economics Minister Jeannot Krecke said that there is "some concern about the way Mr Wolfowitz intends to handle the policy of the World Bank."

German Finance Minister Hans Eichel said that Mr Wolfowitz is a "high level candidate, but there needs to be more discussions before" his election to the post of the development agency.

The finance ministers want him to come to Brussels before his appointment is confirmed at the end of the month, to answer questions about his position on several development issues, such as debt relief.

Unshackled?

One of the first things on the agenda when the meeting opened on Tuesday was the simmering row that has engulfed, and threatened to break up, the Stability and Growth Pact.

EU chief Jose Manuel Barroso wants economic growth to be a priority

France and Germany had complained that the Pact was too restrictive and hampered recovery.

Smaller nations countered that if they could live by the tough rules, then their bigger partners could as well.

At the heart of the problem were the Pact's rules limiting the size of a member state's budget deficit to 3% of gross domestic product (GDP).

France and Germany have had shortfalls in excess of the EU limits in every one of the past three years and had stepped up pressure for a relaxation of the legislation.

Following Tuesday's changes, governments will be able to run a budget at more than 3% of GDP, but only in special circumstances and for a limited period.

Support

French President Jacques Chirac said that the agreement was "remarkable work... to make a more realistic, a more relevant and more flexible Pact".

"A more intelligent pact is a pact that will be better accepted and better respected".

Few countries matched fine words with actions. But could that be about to change? Read more on moves to boost EU growth

The European Central Bank has, however, expressed concern that the changes - agreed at the weekend and passed unchanged on Tuesday - could undermine confidence in European public finances.

The two-day summit of 25 EU leaders in Brussels comes against a backdrop of sluggish growth across Europe.

Earlier this month, the European Central Bank (ECB) cut its growth forecast for the eurozone to 1.6%, reflecting the stumbling economic performance of France and Germany in particular.

The EU has had to row back from ambitious targets set out in Lisbon in 2000, when it set a goal of 3% annual growth in an effort to bridge the economic gap with the United States.