European ministers delay major action for 10 days
From left, Greek Finance Minister Evangelos Venizelos, French Finance Minister Francois Baroin, Luxembourg’s Prime Minister Jean-Claude Juncker, German Finance Minister Wolfgang Schaeuble, European Commissioner for the Economy Olli Rehn, Italian Prime Minister and Finance Minister Mario Monti and Belgium’s Finance Minister Didier Reynders share a word during a round table meeting of the eurogroup at the EU Council building in Brussels on Tuesday, Nov. 29, 2011.
AP
BRUSSELS — Under pressure to deliver shock treatment to the ailing euro, European finance ministers failed to come up with a plan for European countries to spend within their means.
Such a plan is needed before Europe’s central bank and the International Monetary Fund consider stepping in to stem an escalating threat to the global economy.
The ministers delayed action on major financial issues — such as the concept of a closer fiscal union that would guarantee more budgetary discipline — until their bosses meet next week in Brussels.
Asian markets slumped Wednesday as a top EU official conceded that the future of the euro now rests heavily on the meeting of European heads of state on Dec. 9. Stock markets had risen this week on hopes that intense bond market pressure would finally force the eurozone into quicker and more robust action.
“We are now entering the critical period of 10 days to complete and conclude the crisis response of the European Union,” EU Monetary Affairs Commissioner Olli Rehn said, adding: “There is no one single silver bullet that will get us out of this crisis.”
At a meeting Tuesday night, finance ministers for the 17 countries that use the euro handed Greece a promised €8 billion ($10.7 billion) rescue loan to fend off its immediate cash crisis and promised to increase the firepower of a fund to help bail out ailing eurozone countries.
But they failed to increase the firepower of a European bailout fund to €1 trillion ($1.3 trillion), as they had hoped to do.
“It will be very difficult to reach something in the region of a trillion. Maybe half of that,” said Dutch Finance Minister Jan Kees de Jager.
Klaus Regling, head of the bailout fund, tried to be upbeat, saying the ministers had committed to increasing its size from its current €440 billion ($587 billion) but refusing to give a specific size. He assured reporters it was more than big enough to deal with Europe’s immediate debt problems.
“To be clear, we do not expect investors to commit large amounts of money during the next few days or weeks,” Regling said. “Leverage is a process over time.”
The ministers did agree to use the bailout fund to offer financial protection of 20-30 percent to investors who buy new bonds from troubled eurozone nations.
“We made important progress on a number of fronts,” eurozone chief Jean-Claude Juncker insisted late Tuesday. “This shows our complete determination to do whatever it takes to safeguard the financial stability of the euro.”