Eurozone leaders gear up for grand bargain over solution to crisis
2011-03-10 23:22:28
BRUSSELS, March 10 (Xinhua) -- Leaders of the 17 European Union (EU) countries were poised to meet Friday to thrash out a comprehensive solution to the sovereign debt crisis, with a grand bargain inevitable.
One year after the sovereign debt crisis first broke out in Greece, EU leaders agreed in December to seek a comprehensive package of measures to tackle the toughest challenge in the history of the euro.
They were expected to finalize a deal at a summit scheduled on March 24 and 25, which analysts said could be a turning point in the EU's fight against the sovereign debt crisis if the comprehensive package is ambitious enough.
In preparation for the full EU summit, eurozone leaders chose to have a showdown among themselves since most of the envisaged measures would be specifically designed for the single currency club. What they could agree on would be decisive for the ultimate EU outcome.
Despite the high expectations, cracks have emerged among eurozone members over what should be done to overcome the sovereign debt crisis, which has engulfed Greece and Ireland, with Portugal and Spain feared to be waiting in line.
Division seemed to be intensifying with the deadline for a final deal approaching. So far, the most contentious part of the comprehensive package centered on a joint call by Germany and France for sweeping reforms to enhance competitiveness and policy coordination of eurozone economies.
EU President Herman Van Rompuy said the Franco-German proposal for a competitiveness pact in the euro zone would be the top issue for the informal summit of eurozone leaders.
"We will start with the pact for the euro area and discuss how to develop stronger economic policy coordination for competitiveness and convergence," he said in an invitation letter.
The EU president said he would like eurozone leaders to reach an agreement in principle on the reforms, which would be formalized at the full EU summit later this month.
However, much of the Franco-German proposal, which called for eurozone countries to abandon the indexation of wages to inflation, lift retirement ages based on demographics, anchor strict limits on government borrowing in their constitutions and harmonize corporate tax, has met strong resistance from other eurozone members.
Belgium had refused to scrap the country's policy of raising wages in line with inflation, while Ireland was unlikely to increase its corporate tax, which is significantly lower than the EU average and gives the country an advantage in attracting foreign investments.
In a bid to find a common ground, Van Rompuy was asked earlier this month to produce a compromised draft. Internal documents showed the original proposal had been watered down to accommodate political differences, with the reforms set to lose teeth.
On top of the competitiveness pact, countries like Portugal and Spain, which are facing pressure from the markets, were more interested in changes to the EU's bailout fund, which formed part of the comprehensive package.
They wanted in particular to increase the lending capacity of the European Financial Stability Facility (EFSF) and make the use of financial support more flexible.
In the aftermath of the Greek debt crisis, eurozone governments set up the EFSF with a total guarantee of 440 billion euros (608 billion U.S. dollars) for future bailouts, but its effective lending capacity only amounts to 250 billion euros (345 billion U.S. dollars) because of the need to retain its triple-A credit rating.
Investors have been concerned the EFSF would be short of money if Portugal and Spain fall prey to the sovereign debt crisis, but any boost to the bailout fund would require Germany, the EU's paymaster, to put up more money on the table.
Berlin has so far made no commitment to boosting the lending capacity of the EFSF or making the use of the bailout fund more flexible, indicating any more contribution should be linked with acceptance of the competitiveness pact by eurozone partners.
Meanwhile, Greece and Ireland, the countries which had already been bailed out, were pushing for easier terms on the EU's financial loans, which analysts said may be the easiest part of the comprehensive package to be agreed.
The wide-ranging differences have prevented analysts from holding high expectations for the eurozone summit and the later EU summit.
"There has been a lot of hope pinned to the European Council (of EU leaders) that's coming up, that this would be the great leap forward, but that's hoping too much if you reflect on the political reality in Europe," Moritz Kraemer, head of sovereign credit ratings for Europe at Standard & Poor's, said.
(Agenzia Nuova Cina)
quindi...necessariamente offriranno rendimenti maggiori dei vecchi TDS.
) ci penserà 2 volte prima di attacare un paese in difficoltà, sapendo che sarà più facile perdere i soldini?
