S&P warning 'best incentive' to EU: Schaeuble
Standard & Poor's warning that it might downgrade a string of eurozone countries was the "best incentive" for an EU summit to reach a comprehensive deal this week, Germany's finance minister said on Tuesday.
"The solution to the crisis must be ... verifiable, credible and confidence-building. Because the truth is markets worldwide don't trust the eurozone at all right now," Wolfgang Schaeuble said in Vienna.
"This is why we are seeing this escalation, this is why we had yesterday's decision by a rating agency that the six remaining triple-A countries (in the eurozone) ... have also been put under observation."
He added: "This is the best incentive for the meeting of heads of government and state this Friday to do what they have all promised to do, so that the necessary decisions are taken in order to win back gradually the trust of investors worldwide."
Late on Monday S&P warned Germany, France and 13 other eurozone members of possible credit downgrades if leaders continued to dither over dealing with the region's debt crisis.
It took the gloss off statements on Monday by German Chancellor Angela Merkel and French President Nicolas Sarkozy -- ahead of Thursday and Friday's EU summit -- that they want treaty changes to enforce budget discipline.
S&P singled out "continuing disagreement ... on how to tackle the immediate market confidence crisis and, longer term, how to ensure greater economic, financial, and fiscal convergence among eurozone members."
The warning threatened a one-notch cut to the hallowed AAA ratings of Germany, the Netherlands, Finland, Luxembourg and Austria.
France, also AAA-rated and the eurozone's second-largest economy, could be hit with a two-notch cut, as could the other countries currently rated below AAA.
© 2011 AFP