Germany, France push Portugal: report

9th January 2011, Comments 0 comments

Germany and France want to press Portugal to seek a bailout in order to stop Spain and Belgium becoming the next euro crisis casualties, German weekly Spiegel reported Sunday.

Paris and Berlin also want members of the 17-country eurozone to state that they are ready to do whatever it takes to save the currency union, including expanding a 750-billion-euro (970-billion-dollar) rescue fund, Spiegel said citing sources in Berlin.

German and French experts are worried by the high interest rates Portugal is being forced to pay in order to borrow money from investors concerned by Lisbon's public finances.

Interest rates on Portuguese debt rose sharply to record high levels on Friday -- as they did for Spain.

Spain is of much greater concern to Paris and Berlin, with its economy twice that of Portugal, Greece and Ireland combined, a banking sector struggling with bad debts and unemployment at almost 20 percent.

Investors are also becoming concerned by Belgium, which has been without a government for nearly seven months.

On Wednesday, the Portuguese government is hoping to raise up to 1.25 billion euros through a sale of three and nine-year bonds, followed by Spain the following day.

German Finance Minister Wolfgang Schaeuble and French counterpart Christine Lagarde met in Strasbourg last week and both know that convincing Portugal to seek help will not be easy, Spiegel said.

Prime Minister Jose Socrates insists that that his government's austerity measures will bring Portugal's debts down.

© 2011 AFP

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