Brussels, 19/10/2011 (Agence Europe) - The president of the European Commission, José Manuel Durão Barroso, says that the eurozone will have its work cut out for it to find a definitive solution to the sovereign debt crisis, even if the Sunday 23 October summit makes big decisions. Barroso said on 19 October that we are at a key time for the euro and for Europe itself, a crucial period that demands clear, determined solutions. He said that even if key political decisions are taken on Sunday, there would still be a technical phase of ensuring application of the agreement reached by Europe's leaders and work would be ongoing.
Germany and France, the two biggest economies in the eurozone, give the impression that they have different aims for the Sunday summit. German Chancellor Angela Merkel, has warned of the danger of disappointing people who think that after the summit, the eurozone's problems will be over. French President, Nicolas Sarkozy says that Europe is at a turning point in its history and the 23 October summit was a key time for both Europe and France, explained a French government spokesperson, Valérie Pécresse, to AFP. She set out four points that together provided the a solution to all aspects of the crisis, namely first of all, a European bank recapitalisation plan, making the EFSF effective and operational, clarifying the EU strategy for Greece in the new situation that has emerged since the summer break and requires greater public and private funding to ensure the sustainability of the Greek debt, and boosting governance in the eurozone.
Stressing the importance of the Community method at the summit and the greater European integration it reflects, Barroso welcomed the fact that the five-point roadmap he had unveiled to the European Parliament formed the basis of the current talks (see EUROPE 10472). The five-point plan includes the points listed by Pécresse, but includes measures to kick-start economic growth, such as project bonds to finance big infrastructure projects (see related article).
EFSF. The President of the Commission said that the EFSF bailout fund would be able to support countries like Spain that are not subject to an austerity programme. British newspaper The Guardian reports on a Franco-German deal to beef up the EFSF so that it will be able to borrow up to two trillion euros, but not by allowing the EFSF access to ECB cash, explains the European Central Bank's executive director because Germany is strongly opposed to this. Possibly by using the EFSF as a form of insurance policy against default for the purchase of sovereign debt.
Greece. More than 120,000 Greeks hit the streets on Wednesday to protest, violently at times, against the new austerity measures due to be passed by the parliament to help the country meet its budget commitments this year and next (see EUROPE 10450). The payment of the latest installment of aid, €8bn at the start of next month, is crucially needed and conditional upon the austerity measures being implemented. Asked about the belt-tightening in Greece, Barroso said that introducing a structural adjustment programme could bear fruit in the medium-term and there were other places, both in the eurozone and elsewhere, where that was working (such as in Latvia and in Ireland). He said Greece would have to pass through an inevitable and at times painful transition, but it was the only way to win back investor confidence and get the economy back on track. (MB/transl.fl)