Eurozone summit on debt crisis 'not excluded': Van Rompuy

12th July 2011, Comments 0 comments

Leaders of the 17-nation eurozone may hold an emergency summit on the spiralling debt crisis, although no decision has been made, EU president Herman Van Rompuy said on Tuesday.

"No decision has been taken on a summit of the eurozone but it has not been excluded," he told a news conference in Madrid following talks with Spanish Prime Minister Jose Luis Rodriguez Zapatero.

Diplomats in Brussels earlier told AFP the eurozone is considering holding an emergency summit on Friday.

"A meeting of eurozone leaders is under consideration," one diplomat said, also adding that no final decision has been taken.

The summit plans highlight mounting concerns in Europe that the debt crisis will force Greece to declare default and contaminate Italy and Spain, the eurozone's third and fourth largest economies.

Italian and Spanish borrowing costs soared, while stock markets and the euro slumped on Tuesday despite a pledge from eurozone finance ministers the night before that they were committed to ensuring the euro area's stability.

Split for weeks over the terms of a second rescue for Greece, the ministers pledged to strengthen the size and scope of a multi-billion-dollar fund set up in the first 110-billion-euro bailout of Athens in 2010.

"I am fully aware of the current tensions in debt markets," said Van Rompuy. "But let me be very clear that there is a very strong commitmment at the highest level to do whatever is necessary to safeguard the financial stability of the euro area.

"Leaders have to rise above their domestic political agenda, and they will. Proposals of the euro group that will resist the contagion risk in the euro area are urgently needed."

He defended the euro single currency after it plunged further on foreign exchange markets.

"In the difficult times we are facing we tend to forget that the euro is a stable and sound currency with strong fundandamentals compared to other currencies," he said.

"And most importantly the economic recovery in the eurozone as a whole is quite good with forecasts of overall economic growth close to 2.0 percent this year and next year."

He also sought to make a distinction between the problems faced by Spain and those of Greece, Ireland and Portugal.

"This crisis has revealed how interdependent the countries in the eurozone are. But it is extremely important to differentiate across the countries..... The challenges faced by Spain are not the same as those faced by other countries such as Greece."

And he praised the Spanish government's measures to rein in its public deficit, reform the labour market and restructure the financial sector, particularly the regional savings banks.

"This is a very credible package of measures that is contributing to financial stability and will enhance economic growth and employment" in Spain, he said.

Zapatero blamed market ructions on the opening of a debate about how private investors might be asked to take part in a resolution to the Greek sovereign crisis.

"We have to make clear as soon as possible what the central problem is, which was the moment that a debate was opened about the participation of private debt in a Greek solution," the Spanish leader said.

"The debate was not opened properly and it has not closed," he added.

© 2011 AFP

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