EU's Barrosso says pressure on Italy, Spain 'unwarranted'

3rd August 2011, Comments 0 comments

Financial market pressure on Italy and Spain is "clearly unwarranted" but is cause for "deep concern," European Commission President Jose Manuel Barroso said on Wednesday.

The renewed tensions reflected growing concern "about the systemic capacity of the euro area to respond to the evolving crisis," he said, adding that he was urging governments to enact a debt crisis plan agreed two weeks ago "without delay."

An emergency summit of the 17 nations using the single currency on July 21 agreed a second bailout plan for indebted Greece in which, for the first time, leaders took the risk of involving the private sector, meaning banks and pension funds with Greek debt would incur losses.

Moving to reassure increasingly nervous markets, amid US debt woes and stagnant growth, Barroso reiterated that private investor involvement was "a unique solution" to end the crisis in Greece.

"It was agreed that private sector involvement would not be a standard feature of the euro areas crisis management," he said.

Barroso also reiterated that ground-breaking measures were agreed at the summit to reinforce the euro areas systemic response to the crisis by enhancing its rescue fund, the European Financial Stability Facility (EFSF) and reforming euro governance structures.

"It is essential, therefore, that we move forward rapidly with the implementation of all of that has been agreed ... and send an unambiguous signal of the euro areas resolve to address the sovereign debt crisis with the means commensurate with the gravity of the situation."

Barroso said technical work to implement the measures was underway and would be completed "as a matter of urgency".

As implementation of some of the measures would require actions by national parliaments, he said he was writing Wednesday to heads of state and government to ensure actions were "taken without delay."

The pressure on Italy and Spain, which has sent their borrowing costs soaring to euro record highs, "are clearly unwarranted on the basis of economic and budgetary fundamentals in these two member states and the steps that they are taking to reinforce those fundamentals," Barroso added.

© 2011 AFP

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