France wants 'lasting solution' at euro crisis summit

20th July 2011, Comments 0 comments

Thursday's eurozone summit must yield a "lasting solution" to the Greek debt crisis which threatens to destabilise the whole currency bloc, the French government said on Wednesday.

"We have one priority, an urgent one, which is to find a lasting solution to the Greek question," said the government's spokeswoman Valerie Pecresse, also budget minister.

French President Nicolas Sarkozy was due to meet German Chancellor Angela Merkel on Wednesday ahead of Thursday's summit of leaders from the 17 eurozone countries.

"It is a day of work to work out the details of the concrete responses and get every chance of having an agreement tomorrow," Pecresse told reporters after the weekly meeting of Sarkozy's cabinet.

"The president is devoting all his energy to reaching a lasting solution by tomorrow."

On Tuesday, Merkel had played down expectations that Thursday's summit would yield a "spectacular step" forward in solving the crisis.

Pecresse insisted however that France and Germany were in harmony on the broad lines of a second rescue package for Greece, after divergence of opinion on how much of the burden private banks should bear.

French Finance Minister Francois Baroin earlier on Wednesday also played down the divisions, saying "there is a very broad convergence of views" among eurozone leaders.

"There is a will to make Greece's debt more manageable and there are still discussions to be had about the share of the private sector," he told France Info radio, referring to the divisive question of the banks' role.

Germany wants the private banks that lend to Greece to ease its debt burden. France insists such involvement must be voluntary so banks are not seen as being forced to write off part of Greece's debt.

Other tools available to eurozone leaders include emergency rescue funds, taxes on banks and new loan agreements structured in such a way as to avoid an effective debt default.

All wish to avoid the latter, cautiously referred to by officials as an "event".

"Most of all, we do not want a credit event, that is to say a restructuring of Greek debt," Baroin said.

Analysts warn that if the right deal is not struck, investors could lose confidence in Greece altogether, potentially obliging it to drop the euro and spreading panic to bigger economies such as Italy and Spain.

© 2011 AFP

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