EU commissioner defends German economy

(FRANKFURT) - European Energy Commissioner Guenther Oettinger weighed in Tuesday in a spat between his country, Germany, and France over the German trade surplus.

"Europe is confronting stiff competition from Japan, the United States and other economies. That leads industrialised countries like Germany to trade surpluses," Oettinger told the daily Sueddeutsche Zeitung.

"We need more reforms in Europe, like those carried out in Germany. To turn back on such reforms would be to head in the wrong direction," he added.

On Monday, French Finance Minister Christine Lagarde said Germany's trade surplus came at the expense of less competitive eurozone neighbours, and urged Berlin to encourage more domestic consumption.

Lagarde suggested that downward pressure on German wages and a constant drive to increase exports might not be sustainable in the long run and might not work to the good of the 16-nation eurozone.

She got backing from two European commissioners, Joaquin Almunia of Spain who handles competition issues and Olli Rehn of Finland who is in charge of economic and monetary affairs.

German Economy Minister Rainer Bruederle sent Paris a sharp rebuke however, telling the Frankfurter Allgemeine newspaper in an interview published on Tuesday: "For countries, which in the past lived off their entitlements and neglected their competitiveness, to point their finger at others is humanly and politically understandable, but still unfair.

"The structural reforms needed to regain competitiveness are very painful," he noted in a veiled swipe at Paris.