European Union finance ministers have moved closer to agreement on a reform of the Stability and Growth Pact but remain divided over how to assess excessive budget deficits.
Germany wants the cost of its country's unification in 1990 to be taken into account when assessing its budget deficit, while France wants spending on defence, development aid and research to be excluded from the calculation of a budget deficit.
Most countries oppose such exemptions, although there is broad agreement that "relevant factors" should be taken into account in assessing the budgetary positions of euro-zone member-states.
The Minister for Finance, Mr Cowen, called for spending on infrastructure to be taken into account, pointing out that public investment is protected by EU treaties.
"If you want to look for a relevant factor, the only one that's in the treaty is public investment," he said.
Luxembourg's Prime Minister, Mr Jean-Claude Juncker, whose country holds the EU presidency, acknowledged that disagreements remained but said that ministers' positions had moved closer together.
"The presidency has gathered sufficient elements to have an idea of an outline of a possible resolution for March," he said.
Luxembourg hopes to secure agreement on the reform of the pact before EU leaders meet in Brussels for their spring economic summit next month.
There is broad agreement on elements of the reform, which would leave the budget deficit limit of 3 per cent of GDP and the public debt ratio ceiling of 60 per cent of GDP intact. Most countries want the budget rules to become more flexible but some fear that giving national governments too much leeway could undermine the stability of the euro.
Mr Cowen said that the fiscal discipline imposed by the Stability and Growth Pact had already benefited the euro-zone economy by inspiring market confidence in the currency.
"The benefit of that for us has been low interest rates. We want to keep that," Mr Cowen said.
The ministers asked the European Commission to conduct an assessment of the economic impact of a new tax on kerosene, or jet fuel, proposed by France and Germany. Paris and Berlin want the revenue raised by the tax, estimated at up to €20 billion, to be used to fund increased aid for development and fighting AIDS and malaria.
Austria's Finance Minister, Mr Karl-Heinz Grasser, suggested that part of the revenue could be used to help poorer regions in Europe, a move that could ease the burden on the net contributors to the EU's budget, which include Austria.
The Republic, Malta and Greece have shown least enthusiasm for the new tax, although Mr Cowen said he would reserve judgment until the Commission reports. "People have to set out in a paper what the pros and cons are," he said.
