EU conservatives want strong euro, open on Irish rates

5th March 2011, Comments 0 comments

The European Union's conservative leaders said Friday they were set on strict rules to beef up the eurozone's stability and competitiveness, as Ireland sought relief from a massive bailout package.

"Together, we can only safeguard the euro if we are really strong, if we keep order in our households, and if we sharpen the stability pact," Merkel told a meeting of the centre-right European People's Party (EPP) in Helsinki.

"This is something every country has understood," she added.

Merkel, who said that the EU's stability and growth pact had been mishandled for years, rallied Europe's conservatives behind the plan originally proposed by Germany and France ahead of a 17-nation eurozone summit on March 11.

The EPP called on the European Commission to impose strict conditions on future bailout loans.

It said member states should open up national accounts to the scrutiny of the European Commission, which would also be empowered to implement "clear sanction mechanisms" for nations that do not comply with the new fiscal rules.

"Part of the problem is that some member states did not respect the strict discipline that was in the European treaties," European Commission President Jose Manuel Barroso said.

The meeting, hosted by Finnish Foreign Minister Jyrki Katainen, was attended by Italian premier Silvio Berlusconi and other conservative heads of state and government who make up the European Parliament's powerful centre-right bloc.

"There may be some differences and changes in some countries on specific issues, but we have a fairly large consensus on the issues," said Katainen, who presented the EPP proposal.

He also added that in the future, investors would be asked to shoulder more of the burden for investments gone bad, instead of being able to claim back losses.

"There is no market economy without the risk of losing money," he argued.

Ireland's incoming Prime Minister Enda Kenny received a lukewarm response from fellow conservatives over an easing of interest rates and loan maturity attached to the 85 billion-euro bailout granted last year.

"No one was expressing his voice in favour," said EPP head Wilfried Martens, though he stressed that "there was no voice against" either.

Barroso was likewise non-committal.

"There are some painful measures to be taken (in Ireland), that's the reality. And so the best way is to face reality and prepare for the future," he said.

Merkel, meanwhile, said the EU would be discussing the issue on a country-by-country basis, but that any theoretical concessions to the bailout terms would include "further conditionality."

Martens said that Kenny had met with European Council President Herman van Rompuy to present Ireland's case, but revealed no details about the meeting.

It was clear that EPP leaders were more intent on emphasising their demands that the planned European Stability Mechanism (ESM), which will facilitate potential future bailouts, be matched by rigorous financial commitments by every member state.

The ESM is the permanent institution that will take over anti-crisis management of the eurozone in 2013 from the Commission's temporary European Financial Stability Facility (EFSF).

"Without discipline, there is no confidence, without confidence there is no growth, and without growth there is no employment," Barroso said.

© 2011 AFP

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