March 12, 2011
European leaders agreed in the wee hours Saturday on a program of long-term economic overhauls to the 17-member euro zone, and authorized a beefing-up of the bloc's bailout fund for troubled countries.
But the meeting here was marked by several bitter disputes. Ireland, which sought better terms on the €67.5 billion ($93.8 billion) bailout it received last year, was rebuffed after refusing to contemplate raising its low corporate tax rate.
European Central Bank President Jean-Claude Trichet pleaded with France and Germany to permit the bailout fund to buy some of the bonds of weak countries that the central bank has been accumulating during the crisis; he too was rebuffed.
The leaders formally agreed, as expected, to increase the amount the EU's current, temporary bailout facilities can lend, to a total of €500 billion. They also agreed to create a new, permanent fund of the same size in 2013, when the temporary fund expires.
The meeting, which began Friday evening, was a stepping stone to a final deal that the leaders have promised will be concluded by March 25. Time is short. Tensions mounted in Greece after a weak budget report Friday and in Portugal after markets frowned on a bid for further fiscal cuts.
The leaders approved two other changes. First, the bailout funds will be able to buy bonds directly from euro-zone countries, presumably during regular debt auctions. Now, the fund can only make loans. Second, the bailout fund itself will be financed by at least some capital contributions from countries, instead of the current system of guarantees.
More
No comments:
Post a Comment