Eurogroup chair sees decisions soon in debt crisis

Ger­man finance min­is­ter Wolf­gang Schaeu­ble speaks about the Euro­pean Finan­cial Cri­sis dur­ing a a regional party con­ven­tion of the Chris­tion Democ­rats in Karl­sruhe, south­ern Ger­many. Germany’s finance min­is­ter said in an inter­view pub­lished Sun­day that he can’t see room for fur­ther con­ces­sions to Greece, insist­ing anew that the coun­try must imple­ment far-reaching reforms and cut its bud­get deficit. (AP Photo/dapd/Michael Latz, file)

GEIR MOULSON

Asso­ci­ated Press

BERLIN — The Ger­man and Ital­ian lead­ers issued a new pledge to pro­tect the euro­zone, while the influ­en­tial eurogroup chair­man was quoted Sun­day as say­ing that offi­cials have no time to lose and will decide in the com­ing days what mea­sures to take.

The week­end com­ments capped a string of assur­ances from Euro­pean lead­ers that they will do every­thing they can to save the 17-nation euro. They came before mar­kets open for a week in which close atten­tion will be focused on Thursday’s monthly meet­ing of the Euro­pean Cen­tral Bank’s policy-setting gov­ern­ing council.

Last Thurs­day, ECB Pres­i­dent Mario Draghi said the bank would do “what­ever it takes” to pre­serve the euro — and mar­kets surged on hopes of action.

Ger­man Chan­cel­lor Angela Merkel and Ital­ian Pre­mier Mario Monti “agreed that Ger­many and Italy will do every­thing to pro­tect the euro­zone” in a phone con­ver­sa­tion Sat­ur­day, Ger­man gov­ern­ment spokesman Georg Stre­iter said, a state­ment that was echoed by Monti’s office.

That was nearly iden­ti­cal to a state­ment issued Fri­day by Merkel and French Pres­i­dent Fran­cois Hol­lande, which fol­lowed Draghi’s comments.

Though they didn’t pledge any spe­cific action, the com­ments raised expec­ta­tions that the ECB might step in to buy Span­ish and per­haps Ital­ian gov­ern­ment bonds to lower the coun­tries’ bor­row­ing costs, which have been wor­ry­ingly high in recent weeks. Another pos­si­bil­ity might be for the eurozone’s tem­po­rary res­cue fund, the Euro­pean Finan­cial Sta­bil­ity Facil­ity, to buy bonds.

“What mea­sures we will take, we will decide in the com­ing days,” Jean-Claude Juncker, the Lux­em­bourg prime min­is­ter who also chairs meet­ings of the euro­zone finance min­is­ters, or eurogroup, was quoted as telling the Ger­man daily Sued­deutsche Zeitung. “We no longer have any time to lose.”

Italy and Spain have the eurozone’s third– and fourth-largest economies, respec­tively, behind Ger­many and France.

Merkel and Monti agreed that deci­sions made by last month’s Euro­pean Union sum­mit “must be imple­mented as quickly as pos­si­ble,” Stre­iter said, again echo­ing Friday’s Merkel-Hollande statement.

Those included allow­ing Europe’s bailout fund — once a new, inde­pen­dent bank super­vi­sor is set up — to give money directly to a country’s banks, rather than via the gov­ern­ment. Coun­tries that pledge to imple­ment reforms demanded by the EU’s exec­u­tive Com­mis­sion also would be able to tap res­cue funds with­out hav­ing to go through the kind of tough aus­ter­ity mea­sures demanded of Greece, Por­tu­gal and Ire­land, which have had to get inter­na­tional bailout packages.

“I have no doubt that we will imple­ment the deci­sions of the last sum­mit,” Juncker was quoted as say­ing. “It still has to be decided what exactly we will do when. That depends on the devel­op­ments of the com­ing days and how fast we have to react.”

“When I say ‘we,’ I mean the EFSF res­cue fund — that means the 17 euro coun­tries,” Juncker was quoted as say­ing. He added that they would coor­di­nate closely with the ECB — “and we will, as Draghi says, see results.”

“I don’t want to raise expec­ta­tions,” he said. “But I must say that we have arrived at a deci­sive point … the euro coun­tries have arrived a point where we must make extremely clear with all avail­able means that we are deter­mined to ensure the finan­cial sta­bil­ity of the cur­rency union.”

Merkel’s finance min­is­ter, Wolf­gang Schaeu­ble, ear­lier dis­missed talk that Spain might make an appli­ca­tion to the EFSF to buy its bonds. He told the Welt am Son­ntag news­pa­per that “there is noth­ing to this speculation.”

The lat­est assur­ances come as con­cern flares again about Greece. Inter­na­tional debt inspec­tors are scru­ti­niz­ing Greece’s finances and its progress in imple­ment­ing unpop­u­lar bud­get cuts and reforms demanded in exchange for the res­cue loan pro­gram that is keep­ing the coun­try afloat.

Greek offi­cials have called for more time to imple­ment the mea­sures, but patience among cred­i­tors is run­ning short. If the inspec­tors’ report, expected in Sep­tem­ber, is damn­ing, Athens could stop receiv­ing loans and face bank­ruptcy and an exit from the 17-nation euro.

“The aid pro­gram is already very accom­mo­dat­ing. I can­not see that there is still scope for fur­ther con­ces­sions,” Schaeu­ble said.

Posted by AP News on Jul 29 2012. You can follow any responses to this entry through the RSS Feed. Comments can be made below.