Brussels, 20/10/2011 (Agence Europe) - Work on finding an end solution to the sovreign debt crisis in the eurozone is continuing apace among politicians and financial experts, ahead of the special eurozone summit on Sunday 23 October which is expected to make tangible decisions. The talks are focusing on how to make the best us of the EFSF bailout fund and increasing the write-down of Greek bonds for the private sector ahead of a key vote at the Greek parliament on new austerity measures, which are a precondition for the payment of the next instalment of aid, €8 billion, in November.
Both stakes and tempers are so high, particularly due to disagreement between France and Germany, and there are rumours of a further postponement of the summit, rumours immediately quashed by EU Economic and Monetary Affairs Commissioner Olli Rehn. On Wednesday, French President Nicolas Sarkozy left his very pregnant wife at home and travelled to Frankfurt for the farewell party for the ECB President, Jean-Claude Trichet, which served as a mini-summit on the euro between France and Germany.
EFSF. To prevent any further spread of the debt crisis in the eurozone, particularly to Italy, and under pressure from international partners, the eurozone has finally agreed to increase the clout of the EFSF but without requiring contributory countries to increase their guarantees. Paris and Berlin disagree on the amount to be aimed at. German Finance Minister Schäuble has suggested a trillion euros, but the French are talking about twice that. The two countries also disagree on the how the fund should operate. France wants the EFSF to be given access to ECB capital, but Germany and the ECB disagree, saying that such arrangements are not possible under the EU treaty. The solution that seems to be holding water is to allow the fund to guarantee some sovereign debt in the event that a struggling country were to go bankrupt.
One of the five points in the debt crisis roadmap (see EUROPE 10472) is necessary for any of the other measures to have credibility and that is the need for stronger backstop positions in the eurozone, explained President of the Commission, Barroso. In the invitation to the summit the president of the European Council, Van Rompuy, says talks will cover deficits, debt, structural reform, stabilisation mechanisms, reinforcing the banking system, budgetary and economic coordination and governance of the eurozone. Polish Prime Minister Donald Tusk hopes the summit will not generate a two-speed Europe. (MB/transl.fl)