Merkel 'confident' on eurozone summit

18th July 2011, Comments 0 comments

Chancellor Angela Merkel is "confident" a eurozone summit will take place this week and send a "strong signal to markets" that the euro can survive its biggest test to date, Berlin said on Monday.

"The government is working on all levels with all its strength on preparing for Thursday a good result, a decent result, a result that sends out a strong, and clear signal to the markets," Merkel's spokesman Steffen Seibert said.

"Confident that this will be possible, the chancellor is planning her trip to Brussels," he told a regular government briefing in Berlin.

On Friday EU president Herman Van Rompuy announced a eurozone summit for Thursday, only for Merkel, Europe's most powerful leader, to say on Sunday she would only attend if there was the prospect of there being a concrete deal.

It was the second time this month that Merkel, 57, has poured cold water on Van Rompuy's hopes for a summit to finalise a second rescue package for eurozone member Greece.

Seibert said that the 17-nation eurozone is currently in a "very difficult, very challenging phase ... the first big test that this currency has had to face."

"It will depend in the end on whether eurozone leaders can speak with one voice ... The markets are testing whether there is unity, are you going to hold together, are you really ready to rescue the euro in its first big test."

Greece, Ireland and Portugal have needed bailouts from the European Union (EU) and International Monetary Fund (IMF) and markets speculate that Spain and Italy could suffer the same fate.

Germany wants private bondholders to participate in the second Greek rescue, but there are concerns that any debt restructuring this could lead credit ratings agencies to declare Athens in default.

Jean-Claude Trichet, European Central Bank president, warned on Monday that any default would mean that Greek banks could no longer offer the country's bonds as collateral for vital cash lifelines from the ECB.

© 2011 AFP

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