Thursday 8 December 2016

EU ministers claim 'progress' on finding a final strategy

Laura Noonan and Sarah Stack in Brussels

Published 22/10/2011 | 05:00

EUROPE'S finance ministers last night claimed to have made "progress" on a final bid to hammer out a "comprehensive" solution to the eurozone's debt crisis ahead of a summit of EU leaders tomorrow, but key issues remain.

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The crisis talks came as the leader of the eurozone's finance ministers group Jean-Claude Juncker decried the "disastrous signals" Europe was sending out by failing to show "proper functioning leadership".

The euro's two most powerful countries, France and Germany, remain deeply divided on ways to solve Europe's woes. Their leaders Nicolas Sarkozy and Angela Merkel will dine together tonight and attempt to bridge their differences.

Urgency

Yesterday's talks mark the second assembly of Europe's finance ministers in less than a fortnight, a frequency of meetings that underlines the urgency of the crisis despite Europe's many efforts to solve it.

Speaking after the meeting ended last night, Finance Minister Michael Noonan said "progress" had been made on "all main agenda points" but declined to comment further.

It is understood that the meeting adjourned early so decisions could be taken on putting more capital into Europe's banks when ministers from all 27 European countries meet this morning.

A grand solution that had been expected tomorrow will now not come until Wednesday at the earliest, after Europe's leaders decided to meet for a second time so they could discuss proposals with their parliaments before taking decisions.

The urgency of the situation was highlighted yesterday by a threat from ratings agency Standard & Poor's which warned it would downgrade France and four other countries if Europe slipped back into recession.

"The outside impression is disastrous," Mr Juncker told reporters as he arrived for yesterday's meetings. "It does not present an example of superior statesmanship."

On the way into the meeting, several ministers stressed the need for progress, while IMF chief Christine Lagarde insisted the Europeans would "find solutions".

Sources last night, however, confirmed that deep divisions remained on one of the central areas of the crisis solution -- how to better equip Europe's bailout fund to help struggling countries and re-assure markets.

The French want the fund, dubbed the European Financial Stability Facility (EFSF), turned into a bank so it can increase its €440bn pile of cash by borrowing more money from the ECB. Yesterday, both German Chancellor Ms Merkel and her finance minister Wolfgang Schauble re-iterated their firm opposition to that plan.

"We will stick to the situation as it is in the treaty that the central bank is not available for state financing," Mr Schauble told reporters yesterday.

The ECB is itself deeply opposed to lending the money.

Other areas to be agreed by Wednesday include how much Europe's banks will have to boost their capital by, as well as the size of the hit investors will have to take on Greek bonds.

Meanwhile, the finance ministers confirmed last night that embattled Greece will get the next €8bn instalment of its bailout money.

Irish Independent

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