Ireland bailout won't be enough to calm markets: Greece

19th November 2010, Comments 0 comments

Even if Ireland accepts an international bailout, it will be insufficient to calm markets that want to see a permanent anti-crisis mechanism put in place, Greece's finance minister said Friday.

"Even if Ireland is helped, it cannot prevent the debt crisis from continuing," George Papaconstantinou said at a conference in Frankfurt.

He said investors "are not convinced that the solutions are there" and "will focus on other countries: Spain, Portugal."

The yields on Spanish and Portuguese bonds have risen sharply in past weeks along with those on Irish and Greek debt as investors have become increasingly nervous about struggling eurozone countries.

Ireland is currently holding talks on a possible rescue package after its euro partners urged it to consider help in order to reduce the possibility of problems spreading and even threatening the future of the single currency.

Papaconstantinou said putting into place a permanent European Union aid mechanism was needed to calm markets.

"The EU absolutely has to discuss a permanent aid system, or something like that," said the minister.

German Finance Minister Wolfgang Schaeuble later echoed Papaconstantinou's sentiment, saying "the earlier we get fixed" the modalities of a rescue mechanism the earlier "the markets will calm down."

The EU created the 440-billion-euro (600-billion-dollar) European Financial Stability Facility (EFSF) in May at the height over the crisis over Greece, but it runs for only three years.

Greece was forced to take a 110-billion-euro rescue package from the EU and International Monetary Fund when it could no longer raise funds on bond markets except at exhorbitant rates.

© 2010 AFP

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