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'EU summit won't yield quick crisis fix'

Jul 19 2011 18:00 Sapa

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Hannover - German Chancellor Angela Merkel dashed hopes Tuesday that the upcoming European Union summit on Greece would yield a quick and comprehensive solution to deal with the debt crisis.

There won't be anything as "spectacular" as a restructuring of Greece's debt or an agreement on eurobonds at Thursday's summit in Brussels, the leader of Europe's biggest economy said.

Instead, the summit must yield an agreement on a "controlled process of successive steps ... aiming at finally getting to the cause of the problem: The issue of reducing Greece's debt and the issue of raising its competitiveness."

Merkel, speaking in the northern German city Hannover alongside visiting Russian President Dmitry Medvedev, added it is understandable that people desire a quick solution "following over a year of debate and decisions."

"But who politically fosters that desire has not understood the dimension and the tasks we are facing," Merkel said. Those who promise such a quick solution are either careless or have lost patience, she added. "Either way, that is not good."

Merkel insisted that tackling the debt crisis was a "historical task" because Europe could no longer be conceived without the euro, which is currently used by more than 300 million people in 17 of the bloc's 27 nations.

Russia's president noted that a sizable share of Russia's trade and currency reserves were now euro-denominated, but Medvedev added that he is "optimistic" that Europe will tackle the crisis.

EU leaders will meet Thursday in Brussels to discuss another bailout package for Greece, which already received emergency loans of more than €110bn ($156bn) last year.

Greece's finance minister claimed that a European debt deal is "attainable" on Thursday, saying he believed European governments and private bond holders would be able to draw up a new rescue deal for his ailing country by then.

"Reaching a solution is attainable because this solution does not only include Greece," Evangelos Venizelos told The Associated Press in an interview late Monday. "At issue is the euro and the resilience of the eurozone. That is why protection of Greece is a self defense mechanism for the eurozone. That will help us avoid a domino effect."

Merkel has insisted Greece's private creditors should share part of the burden of the next bailout through a "voluntary" contribution, but she and the European Central Bank have opposed forcing losses upon creditors.

Analysts say a forced restructuring could rattle financial markets and lead to contagion, possibly forcing defaults in Portugal and Ireland, who have also received an emergency loan package by the EU, the ECB and the International Monetary Fund. Borrowing rates in larger eurozone members, such as Italy and Spain, have risen alarmingly in recent days.

Greece is enacting major economic reforms alongside an austerity program as it grapples with a national debt topping €340bn ($477.5bn) that has brought it to the brink of default.


 
 
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