Japan calls on German 'central role' in euro 'firewall'

18th November 2011, Comments 0 comments

Japan called on Germany on Friday to step up and help plug the widening hole in Europe's finances, saying Berlin should play a leading role in creating a debt "firewall".

Finance Minister Jun Azumi said the continent's largest economy needed to do more if Europe was to get out of the downward spiral of debt that is threatening to tip the global economy into recession.

"It is important for Germany to (play) a central role in creating a firm funding scheme that we can refer to as a firewall," Azumi told a news conference, Dow Jones newswires reported.

"I think it is time for Germany to work particularly hard," Azumi said, adding the need to prevent a worsening of the situation in Italy and Spain was becoming "urgent".

Azumi's comments come after European deal brokers began travelling the globe looking for cash to boost the coffers of a bailout fund to help countries struggling under piles of sovereign debt.

The continent's leaders have agreed to a massive boost to the European Financial Stability Facility (EFSF), but shied away from putting in their own money, instead agreeing to "leverage" its capacity from 440 billion to one trillion euros, via a debt insurance scheme.

The head of the fund, Klaus Regling, received a distinctly non-committal response during a cap-in-hand visit to China, where he was asking Beijing to spend some of its $3.2 trillion of foreign reserves on the venture.

At the G20 in Cannes, Chinese President Hu Jintao told his French counterpart Nicolas Sarkozy that Europe had primary responsibility for resolving the debt crisis.

Beijing has said it could provide up to $100 billion in support for the eurozone, but says there are strings attached; it wants certainty that the EFSF package will work and wants to know what sort of guarantees would be offered if the bailout fails.

Azumi's comments echo statements from his boss, Prime Minister Yoshihiko Noda, during the APEC meeting in Hawaii at the weekend.

Noda said Japan, the world's third-largest economy, was committed to helping the eurozone but stressed the bloc bore the primary responsibility for sorting out its own mess.

"We want Europe to first roll up their sleeves and work on this. I believe this is the very first step to bring confidence to the marketplace," Noda told a news conference in Honolulu.

"This crisis is a matter that will have bearing for the world as a whole," Noda said. "If the proper stance is demonstrated, then we will make our appropriate contributions."

Japan was initially buying 20 percent of the debt issued by the EFSF, but the figure has recently decreased to about 10 percent.

Japan also has a mounting public debt and faces major challenges as it rebuilds from the catastrophic March 11 tsunami.

© 2011 AFP

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