Rutte hails euro accord
Dutch Prime Minister Mark Rutte has welcomed the euro zone accord reached in the early hours of Thursday morning, calling it "of crucial importance". The deal aims to draw a line under spiraling debt problems that have threatened to unravel the European single currency project.
“We have made great steps on all the issues discussed,” Rutte told journalists after the marathon meeting involving the 17 euro zone nations finally ended in Brussels after eight hours of hard-nosed negotiations.
“We’ve made the right decisions,” the prime minister said, referring in particular to arrangements designed to tighten budget discipline in the euro zone. Rutte was pleased with pledges made by all member states to follow EU Commission recommendations to promote financial stability and economic growth.
Stronger EU Commission The EU executive body seeks to strengthen the role of the commissioner charged with euro zone matters by giving him greater powers when it comes to supervision and control. That part was inserted in the text at the request of the Netherlands, Prime Minister Rutte said.
The negotiations in Brussels involved bankers, heads of state, central bankers and the International Monetary Fund. It ended with an agreement on the part of Europe’s private banks and insurers to accept a 50-percent cut in their bond investments to reduce Greece's debt burden by 100 billion euros, cutting its debts to 120 percent of GDP by 2020, from 160 percent now.
At the same time, the euro zone will offer "credit enhancements" or sweeteners to the private sector totalling 30 billion euros. The aim is to complete negotiations on the package by the end of the year, so Greece has a full, second financial aid programme in place before 2012.
The value of that package, EU sources said, would be 130 billion euros - up from 109 billion euros when a deal was last struck in July, an agreement that subsequently unravelled.
Italy and Spain As well as the deal on deeper private sector participation in Greece, euro zone leaders also agreed to scale up the European Financial Stability Facility, their 440-billion-euro 600-billion-US dollar bailout fund set up last year.
The EU leaders hope that will be enough to stave off any worsening of the debt problems in Italy and Spain, the region's third and fourth largest economies respectively.
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