EU readies $156bn package to boost growth
Rome, June 23, 2012
The leaders of Germany, France, Italy and Spain agreed yesterday on a 130 billion euros ($156 billion) package to try to revive economic growth in Europe but differed over whether and how to launch joint bonds to combat the euro zone's debt crisis.
After a four-way summit in Rome's Renaissance Villa Madama, Italian Prime Minister Mario Monti said the European Union should adopt a series of growth measures worth about one per cent of the region's gross domestic product at a summit next week.
'Growth can only have solid roots if there is fiscal discipline, but fiscal discipline can be maintained only if there is growth and job creation,' Monti told a joint news conference after talks that lasted just an hour and 40 minutes.
The growth measures, already in the works in Brussels, include increasing the European Investment Bank's capital, redirecting unspent EU regional funds and launching project bonds to co-finance major public investment programmes.
No new measures were announced yesterday. German Chancellor Angela Merkel, who leads Europe's most powerful economy and the main contributor to its rescue funds, endorsed the growth package but made no mention of any move towards mutualising past euro zone debt or new borrowing.
French President Francois Hollande appeared to voice impatience with Berlin's reluctance, saying it should not take 10 years to create jointly underwritten euro bonds. He said greater solidarity was needed among member states before they abandon more sovereignty to EU institutions. The German position essentially amounts to the reverse.
'I consider euro bonds to be an option ... but not in 10 years,' Hollande said in a direct challenge to the chancellor.
'There can be no transfer of sovereignty if there is not an improvement in solidarity.'
Merkel has argued members of the 17-nation currency union must transfer control over national budget and economic policies to Brussels before Germany would consider common debt issuance.
Their contrasting comments left much work for diplomats to produce a convincing blueprint for closer fiscal and banking union at a full EU summit next Thursday and Friday, which Monti called a defining moment in the crisis.
That plan is expected to include the first steps towards a banking union, starting by putting the European Central Bank in charge of supervising large cross-border euro zone banks.
Dangerously high Spanish borrowing costs have eased a little on market hopes for policy initiatives at the Brussels summit. If it falls short, Madrid may be pushed closer to eventually needing a sovereign bailout.-Reuters