EU officials in weekend push to prevent Greek crisis spreading
Source: Agencies |
May 9, 2010, Sunday
|
Print Edition
Print Edition
EUROPEAN Union officials were working out the details of a financial support mechanism yesterday to prevent Greece's debt turmoil spreading to Portugal and Spain.
They plan to present the recommendations to EU finance ministers for approval today.
The leaders of the 16 countries that use the single currency said on Friday, after talks with the European Central Bank and the executive European Commission, that they would take whatever steps were needed to protect the stability of the euro area.
Italian Prime Minister Silvio Berlusconi and French President Nicolas Sarkozy cancelled a trip to Russia yesterday to continue consultations with EU leaders over the crisis.
Financial markets have been pounding euro zone countries with high deficits or debts as well as low economic growth, threatening to force Portugal, Spain and Ireland into a position where, like Greece, they would need to seek financial aid.
The euro zone leaders, who have been accused of heightening market uncertainty with a lack of action, agreed to accelerate budget cuts and ensure deficit targets are met this year.
But they also decided, under pressure from the markets, to ask all 27 EU countries to agree on a mechanism to ring-fence the Greek crisis before markets open tomorrow.
"The euro zone is going through the worst crisis since its creation," French President Nicolas Sarkozy said after Friday's summit in Brussels.
"The leaders have decided to put in place a European intervention mechanism to preserve the stability of the euro zone. The decisions taken will have immediate application, from the point that financial markets open on Monday morning."
"If the domino effect begins, no economy is safe," Finnish Prime Minister Matti Vanhanen said yesterday.
Euro zone sources said late on Friday that the mechanism could be funded by bonds issued by the European Commission with guarantees from euro zone states.
They plan to present the recommendations to EU finance ministers for approval today.
The leaders of the 16 countries that use the single currency said on Friday, after talks with the European Central Bank and the executive European Commission, that they would take whatever steps were needed to protect the stability of the euro area.
Italian Prime Minister Silvio Berlusconi and French President Nicolas Sarkozy cancelled a trip to Russia yesterday to continue consultations with EU leaders over the crisis.
Financial markets have been pounding euro zone countries with high deficits or debts as well as low economic growth, threatening to force Portugal, Spain and Ireland into a position where, like Greece, they would need to seek financial aid.
The euro zone leaders, who have been accused of heightening market uncertainty with a lack of action, agreed to accelerate budget cuts and ensure deficit targets are met this year.
But they also decided, under pressure from the markets, to ask all 27 EU countries to agree on a mechanism to ring-fence the Greek crisis before markets open tomorrow.
"The euro zone is going through the worst crisis since its creation," French President Nicolas Sarkozy said after Friday's summit in Brussels.
"The leaders have decided to put in place a European intervention mechanism to preserve the stability of the euro zone. The decisions taken will have immediate application, from the point that financial markets open on Monday morning."
"If the domino effect begins, no economy is safe," Finnish Prime Minister Matti Vanhanen said yesterday.
Euro zone sources said late on Friday that the mechanism could be funded by bonds issued by the European Commission with guarantees from euro zone states.
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