Home > World News > EU’s Barroso strikes upbeat note on debt crisis pre-summit

EU’s Barroso strikes upbeat note on debt crisis pre-summit

European Commission President Jose Manuel Barroso delivered an upbeat appraisal of Europe’s efforts to quell the debt crisis on Wednesday, sounding more positive than officials have done in months, and promising “less drama” at a summit on Thursday.

Speaking shortly after the European Central Bank announced it had provided 530 billion euros to 800 banks under its special three-year loans programme, a move that has helped calm markets, Barroso played up the progress made in getting on top of a crisis that has lasted more than two years.
As well as striking a deal on Feb. 21 to cut Greece’s private sector debt by about 100 billion euros, the euro zone has backed legislation to tighten budget rules and 25 of the EU’s 27 countries will sign up to a ‘fiscal treaty’ at the March 1-2 summit committing them to balancing their budgets.
Barroso said those steps had laid the ground for leaders to focus more intensely on promoting growth when they meet for two days of talks, suggesting the hardest work had been done in tackling a crisis that has shaken Europe to its core.
“I think we may have the conditions now to start changing the perspectives,” Barroso said in a speech presenting his priorities for the summit. “We now need to invest as much in getting Europe back into growth as we are currently investing in getting Europe out of the crisis.”
While the euro zone is far from being in the clear, there are increasing signs that a corner may eventually be turned.
As well as the deal to restructure Greece’s debt burden – which itself remains riddled with risk – the yields on the debt of Ireland, Spain and Italy have come down sharply, helped in large part by the vast allocations of liquidity – more than 1 trillion euros – from the ECB’s loan programme.
Portugal’s borrowing costs have been an exception but euro zone ministers have indicated a further bailout will be forthcoming for Lisbon if needed.
Proposals to combine the resources of the euro zone’s two bailout funds – the temporary EFSF, which still has about 250 billion euros available, and the permanent, 500-billion-euro ESM – remain on track, despite Germany’s opposition to discussing the issue until later in March.
If the firewalls are eventually combined to create a ‘super-fund’ of roughly 750 billion euros, it would reassure financial markets that the euro zone is better placed to tackle any future problems in Portugal, Spain, Italy or elsewhere.
Greece, which even after the debt restructuring will have debts that far exceed its GDP, will remain a problem, and officials accept it is possible it might need a third programme of support in the future. But for now, Barroso said, there are reasons to be more optimistic.
“Without being complacent, I think we can begin to be confident that we are laying the conditions to increase the growth potential for Greece, if we stay the course,” he said.
“Regarding Europe in general, while our forecasts are for mild recession for this year, the interim economic forecast also points to the return to growth in the second half of the year.”
With the firewalls no longer on the schedule for this week’s summit and Greece being dealt with by euro zone finance ministers in a separate meeting before the leaders meet, the agenda for the heads of state and government is lighter than expected.
Whereas the euro zone debt crisis has dominated summits for the past two years, it will be a far less dominant topic this time, with issues such as Serbia’s EU membership bid, Syria and Belarus more likely to spark debate.
The last summit on Jan. 30 ended after midnight and the one before that went on until 5 a.m. This one is expected to be slightly less taxing, although surprises are always possible.
“This European Council should be – you never know but should be – with less drama than the usual last summits,” Barroso said.

“I’m sure you will agree, a little less drama will do no one any harm.”

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