Berlin says EC chief 'complicating' euro situation

17th January 2011, Comments 0 comments

German Finance Minister Wolfgang Schaeuble said Monday that European Commission President Jose Manuel Barroso was making the eurozone debt crisis more complicated with calls to boost a rescue fund.

"Isolated proposals do not make the situation any easier, but rather more complicated," Schaeuble told Deuschlandfunk radio as finance ministers prepared to discuss changes to the emergency fund in Brussels.

The German minister reiterated Berlin's position on the issue, saying he saw "absolutely no reason in the short term to debate" over an increase in backing for the European Financial Stability Facility (EFSF).

The fund was established to raise money on behalf of heavily indebted eurozone governments.

Schaeuble added however that he had no objection to thinking "in the medium term" about changes to the programme, which is supposed to be replaced by a permanent mechanism in 2013.

"It is not a question of increasing or augmenting but of ensuring that the amount agreed to in May is in fact available," he said.

The EFSF has a nominal value of 440 billion euros ($585 billion) but because funds must be kept in reserve to maintain a top credit rating and obtain low interest rates, its effective capacity is more like 250 billion euros.

When matching funds from the International Monetary Fund and other European Union sources are included, the EFSF has a nominal size of 750 billion euros.

Germany, the biggest donor to the facility, has resisted calls for boosting that amount to as much as 1.5 trillion euros, as the coalition government headed by Angela Merkel gears up for seven regional elections this year.

In Brussels, eurozone finance ministers gathered meanwhile to find a way to calm financial market fears over the fate of countries like Portugal that are finding it harder to finance their debt.

Barroso has urged eurozone countries to move faster on the issue and has not hesitated to tell Berlin what he thought it should be doing.

"I expect top German politicians to respect the role of the commission. We in the commission have not only the right, but also the duty, to tell Europe's citizens what we think is right," he told Germany's Spiegel magazine.

© 2011 AFP

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