Crisis will strengthen euro: EU chief

12th April 2011, Comments 0 comments

The eurozone crisis will not spread to Spain, the EU's top official said Tuesday as he argued that the European single currency bloc will learn from its mistakes and emerge stronger.

"The threat of contagion has greatly diminished or has disappeared entirely," European Council President Herman Van Rompuy told Kathimerini daily in an interview published as he began a one-day visit to Athens.

"It is very clear from the fall in Spanish spreads," he added.

In contrast to Greece, Ireland and Portugal who have requested EU bailouts over the past year, Spain is a major eurozone economy whose collapse would seriously threaten the single currency, analysts have warned.

Rompuy, who is visiting Athens to give a speech at a foreign policy think-tank and talk to the Greek prime minister and president, insisted that Europe had the resources and the determination to overcome the crisis.

"I can tell you that the EU will not 'waste' the crisis. We have begun the most radical revision of economic governance since the launch of the euro," he said in statements translated into Greek.

"The forces that bring us together are much stronger than those keeping us apart. I have no doubt that the eurozone will emerge stronger and more united from the crisis," he said.

But the EU chief insisted that the bloc had to draw "the right lessons" from the crisis.

He argued that member states had so far been loose with fiscal policy and had failed to keep a close eye on their banks. In addition, the EU's economic monitoring framework was until now too focused on deficits and not enough on debt sustainability and macroeconomic threats.

"The framework proved insufficient, it was undermined because it was not applied when large countries trampled on the rules," he said.

"In ten years from now we will see the years 2010-2011 as a turning point to something better," Van Rompuy said.

© 2011 AFP

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