French presidential hopeful warns over rating agencies

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French presidential hopeful Francois Hollande told European leaders on Wednesday to find answers to the eurozone debt crisis at a weekend summit or see the rating agencies win.

Hollande, selected on Sunday as the French left's candidate for next year's presidential election, issued the warning on a visit to Spain where he met with Prime Minister Jose Luis Rodriguez Zapatero.

European leaders including French President Nicolas Sarkozy and German Chancellor Angela Merkel will meet Sunday to try to resolve the two-year crisis over the sustainability of their sovereign debts.

Finance ministers from the eurozone and the broader European Union will hold meetings in the two days ahead of the leaders' summit.

"At the European summit we will see if the heads of state and government, and notably the two main figures, Nicolas Sarkozy and Angela Merkel, are up to the task," Hollande said in Madrid.

"If they are not, then we will have increasingly strong pressure from the agencies and the markets," he said on the sidelines of an international conference on progressive policies.

"When the politicians do not take the appropriate measures, when the politicians surrender their arms, then the markets are all-powerful," he warned.

Late Tuesday, Moody's Investors Service slashed Spain's sovereign credit rating by two notches to A1 from Aa2, with a negative outlook, just days after a similar move from Standard & Poor's.

Describing a now familiar malaise of slow growth and crushing private and public debt, Moody's in effect issued a vote of no confidence in Spain and the European Union's handling of the crisis so far.

Moody's has also warned that France's AAA-rating is at risk.

"The outcome of the European summit will be decisive," Hollande said.

If the European leaders are able to find the right response to show their ability to intervene, "then the rating agencies will be put in their place," Hollande said.

"If they do not live up to their responsibilities at the weekend, we will have the victory of the rating agencies," he said.

If Europe failed to define a policy to tame markets and support the debt of the most vulnerable countries then the states would be confronted by the markets and "subject to the rating agencies", he said.

Sarkozy, the right-wing French president, is all but certain to run for re-election, but opinion polls show him lagging well behind.

© 2011 AFP

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