Brussels, 20/07/2011 (Agence Europe) - The president of France, Nicolas Sarkozy, is in Berlin to impress upon Germany that a true solution is needed to the euro sovereign debt crisis which does more than simply agree on the second Greek bailout. He arrived in the German capital on Wednesday 20 July, the day before a special summit of eurozone heads of state in Brussels. A spokesperson for the French government, Valérie Pécresse, said Sarkozy was doing his utmost to find a lasting solution to the Greek problem, a solution that would inevitably require the agreement of France and Germany. Saying that the eurozone was faced with a historic decision, the French foreign minister, Alain Juppé, said that either one went backwards and let all the achievements to date crumble away, which would be an absolute disaster for all countries, or one decided to go forward.
Politicians in Germany were keeping a low profile, not wanting to raise hopes about tangible outcomes at Thursday's summit. On Wednesday, a German government spokesperson said the aim of the meeting was for the European countries to reach agreement, a common line on the details of the new Greek bailout. The German Chancellor, Angela Merkel, warned on Wednesday that nobody should expect any spectacular breakthroughs.
The second three-year Greek bailout will be of a similar scale to the previous one, €110 billion, and be financed by institutions (the EU and the IMF), income from the Greek privatisation programme and cash from the private sector (banks, insurance companies and pension funds). The sticking point is the private sector's contribution (see EUROPE 10422). The French finance minister, François Baroin, said that everyone agreed on the aims and also agreed on the means and the need for speedy action. France and Germany agree that a credit event must be avoided because this would amount to handing speculators victory on a golden plate, he added.
On Wednesday, the European Commission increased the pressure on Europe's leaders, with the president of the Commission, José Manuel Durão Barroso, warning: “The situation is very serious. It requires a response. Otherwise the negative consequences will be felt in all corners of Europe and beyond.” The minimum we must do tomorrow is to provide clarity on the following: measures to ensure the sustainability of Greek public finances; feasibility and limits of private sector involvement; scope for more flexible action through the European Financial Stability Facility (EFSF); repair of the banking sector still needed; measures to ensure the provision of liquidity to our banking system. He said each country had to keep its promise to do everything necessary to ensure stability of the euro, whether that meant reducing their debt and deficit or demonstrating solidarity. (M.B./transl.fl)