Eurozone finance ministers on Friday agreed with U.S. Treasury Secretary Timothy Geithner to pursue “a strong and international response” to the financial crisis plaguing both sides, but appeared to have found little other common ground.
The chairman of the 17-strong Eurogroup ministers’ panel, Jean-Claude Juncker, said that there had been “slightly different views” over the use of stimulus packages — not an option in Europe, he said.
He rejected suggestions that the idea of expanding the Eurozone’s bailout fund had been brought forward, saying that the Eurogroup would not discuss “the increase or expansion of the EFSF with a non-member of the euro area.” Austrian Finance Minister Maria Fekter, meanwhile, told reporters she hadn’t felt it “justified” to have Geithner “explain the world to us — even though we are in better shape than the US when you look at basic data.” But Juncker said he didn’t feel that Geithner had been “lecturing” his European counterparts during the meeting in the south-western Polish city of Wroclaw, calling it instead a “dialogue among friends.” “He was making his points, as we did make our points. This was a normal transatlantic dialogue,” he said. “We are committed to a strong and international response to these challenges.” The Eurozone has been hounded by questions about its common currency’s ability to withstand a debt crisis that has already forced three of its member states to seek international bailouts.
Wild market swings have led observers to speculate that more countries will need to follow suit, generating concern across the Atlantic that another recession may be in the making.
Eurozone leaders had hoped to calm fears with reforms agreed at a special summit in July — including an expanded mandate for the bailout fund — but their implementation by national parliaments has been drawn out.
“Our permanent message is of course to be ahead of the curve. All that I heard goes in this direction,” European Central Bank president Jean-Claude Trichet said. “But the problem is not words, it is deeds.” Only Belgium, France, Italy, Luxembourg and Spain have ratified the reforms so far, with strong resistance being met in Slovakia.
Both Mr. Juncker and Mr. Rehn said they hope that the ratification process will be completed by mid-October.
The effort to get the economy of the EU’s main problem child, Greece, back into shape has also faced hurdles.
Experts from the bloc and International Monetary Fund (IMF) are currently reviewing whether the country has implemented enough austerity measures to qualify for the next tranche of its first bailout, on which it depends to remain solvent.
EU Economy Commissioner Olli Rehn said in Wroclaw that a decision will be made in early October, paving the way for a disbursement by the middle of the month — if Greece has met its part of the deal.
“The conclusion of the review indeed is only dependent on the political will and ability of the Greek government and parliament to meet the fiscal targets and other conditions that are related to the sixth disbursement,” he said. “The ball is in the Greek court.” Greek Finance Minister Evangelos Venizelos insisted that his country was “on track” upon arriving in Wroclaw.
But Finnish officials have also upped the ante for their participation in the second Greek bailout, insisting that Greece offer the Nordic country collateral in return.
Mr. Juncker said the Eurogroup had “made progress” on the issue, agreeing that it should be “done at an appropriate price” if it is carried out.
The Wroclaw meeting is to be expanded to all of the European Union’s 27 finance ministers on Friday afternoon.
