BRUSSELS: Eurozone leaders agreed in principle Friday to strengthen emergency rescue resources and widen the scope of a permanent bailout fund, pending final approval of “concrete” measures in March.
In conclusions adopted at a European Union summit, the leaders of the 17 states that share the single currency said they would fix a “global response” to the debt crisis that saw bailouts for Greece and Ireland last year, with more forecast for Portugal and possibly others.
A special summit will be held in March to finalize efforts to avoid new debt crises, French President Nicolas Sarkozy said. A favored date emerging is March 4.
The eurozone summit would allow leaders most directly affected by moves to fix flaws in the monetary union and boost rescue funds, to debate which economic policies would be applied right across the economic bloc.
EU president Herman Van Rompuy was tasked with driving consultations with member states aimed at ensuring the full 440 billion euros ($600 billion) the European Financial Stability Facility can borrow from markets may be lent as aid. At present some 200 billion euros must be kept back as a cash buffer.
They also agreed to bring “flexibility” to their debt fire-fighting toolkit, amid calls to let the Luxembourg-based EFSF buy bonds at non-penal rates from countries struggling to raise funds on markets, or lend the likes of Greece cash to buy back bonds that have already lost up to 30 percent of their value trading on open markets.
Meanwhile, Luxembourg Prime Minister Jean-Claude Juncker came out Friday against French-German proposals to remove the indexing of wages to inflation across the 17-nation eurozone. “I can’t really detect a reason why abolishing the indexation of wages should improve the competitivity of my country or of the euro area,” Juncker, who leads the Eurogroup of finance ministers, said after an EU summit considered an outline set of reforms put forward by Berlin and Paris.
Germany and France proposed a competitiveness pact for Europe Friday and EU leaders discussed strengthening a euro zone rescue fund, hoping to win back market confidence in the bloc’s public finances. But there was almost immediate opposition to the Franco-German proposals, both on the way they were laid out without discussion and on the substance of the measures.
– Agence France-Presse