Brussels, 05/09/2011 (Agence Europe) - The search for a solution to the public debt crisis saw Herman Van Rompuy, the president of the European Council, travelling to Helsinki and then Berlin on Monday 5 September to meet the leaders of Finland and Germany and road-test his crisis management ideas (the eurozone's leaders have instructed him to come up with proposals by the middle of next month). Earlier in the day, he said on Flemish (Belgian) radio that Europe had to up the pressure on Greece and Italy to ensure both countries implemented appropriate austerity measures (measures already decided upon or in the process of being decided upon). He brushed aside the idea of any country leaving the eurozone. Fearing that a new global recession might be on the way amidst the problems in the eurozone with the sovereign debt crisis, the financial markets are continuing to plummet.
On Monday, treasury directors from member states met in Brussels to examine the second Greek bailout plan, which has still not been fully decided upon. The talks focused on the guarantees that Finland is demanding for its share of the €109 billion bailout. Belgium's finance minister, Didier Reynders, said in an interview with German magazine Der Spiegel that any country wanting guarantees would have to pay a price for it, echoing earlier comments by the Austrian finance minister, Maria Fekter (see EUROPE 10442).
Germany's finance minister, Wolfgang Schäuble, called for countries to introduce austerity measures (Italy has adjusted its planned measures to bring the budget back to equilibrium by 2013). “Piling on more debt now will stunt rather than stimulate growth in the long run. (…) The recipe is as simple as it is hard to implement in practice: western democracies and other countries faced with high levels of debt and deficits need to cut expenditure, increase revenues and remove the structural hindrances in their economies, however politically painful”, he explained in an article in FT.com. On the idea of leaping forward to budget union (convergence), he said it would not act as a greater incentive for the struggling countries to implement reform, but would oppose the traditional European integration process which proceeds one step at a time: “Allowing the crisis to infect the eurozone as a whole and threaten the euro, would be riskier still. This does not mean that fiscal policy in the eurozone should not gradually become more centralised. It should, as long as this process is legitimised by a strong democratic mandate”. Schäuble added that it would take time to reinforce the eurozone and various institutional reforms would be needed to this end.
Greece. Rumours in the media and from politicians about disagreements between the Greek government and its creditors (the European Commission, the ECB and the IMF) are not music to the ear of the Greek finance minister, Evangelos Venizelos. In a statement published on Sunday, he criticised people for generating fear and uncertainty through idle speculation and media exaggeration, stressing the Greek government's determination to implement the decisions taken by the eurozone summit on 21 July (expanding the powers of the EFSF fund, finding a solution to Finland's request for guarantees and finalising details of how the private sector will participate in the second bailout). He said that full implementation of the 21 July decisions by mid-October could change matters and remove some of the pressure on Greece's real economy. (M.B./transl.fl)