SAINT PETERSBURG, Russia (Dow Jones)--Europe will find a way to overcome the debt crisis in Greece, but needs a "common sense contribution" from the financial sector to guarantee success, Spanish Prime Minister Jose Luis Rodriguez Zapatero said Saturday.
Zapatero told a panel at a Russian investment conference that the continent's long-term political commitment to integration and its awareness of a deep interdependence between member states would ensure that a political solution to the current crisis can be found.
However, he avoided any more direct answer to the question of whether Greece should be allowed to default. International ratings agencies have cut their ratings of Greece to the lowest level above "default" this week, increasingly convinced that it cannot manage its debt burden on its own, and doubtful of the willingness of its partners to keep helping it.
"I don't accept the short-term analysis," Zapatero said. "It's a snapshot that doesn't reflect the realities of the European project."
Zapatero promised that European Union leaders, who convene next week for a two-day summit that is sure to be dominated by the debt crisis, will support Greece with "reasonable measures", acceptable to financial markets.
But both he and Finnish President Tarja Halonen, addressing the same panel discussion, stressed the need for the private sector to show "common sense" and "responsibility."
A number of euro-zone states, led by Germany, have insisted that they won't finance additional aid to Greece unless private-sector creditors accept a "rolling-over" of current exposure, effectively waiving the right to have their bonds redeemed on schedule.
International ratings agencies have said they would be likely to consider any such agreement a default. That would have profound consequences, as the European Central Bank has said it would no longer be able to lend money against Greek government bonds in that case. The loss of ECB support could lead to an immediate collapse of the Greek banking system, which currently bridges an EUR85 billion funding gap with loans from the ECB.
At the same conference Friday, Deutsche Bank AG (DB, DBK.XE) chief executive Josef Ackermann had accepted the need for Greece's creditor banks to take an active role in resolving the crisis, but stressed that the austerity plan imposed upon Greece has to be supplemented with a broader plan to support growth there.
German Chancellor Angela Merkel and French President Nicolas Sarkozy pledged Thursday that they would work with the ECB to achieve a mutually acceptable solution, but it is still unclear whether Greece can meet its obligations until that solution is found, not least due to increasing political resistance to the austerity that its creditors have demanded of it.
Zapatero dismissed the notion that the euro as a whole is in crisis, and was supported in that opinion by Halonen.
Zapatero said that the essence of the crisis is in individual states' debts. Greece's troubles have led many market participants to fear contagion to other economies with debt problems, such as Spain's--although Spain's are largely concentrated in its banks rather than in its government.
He pledged that the euro zone would do a better job in future of observing the currency union's rules on budget discipline and competitiveness.
"What is the lesson we have learned? Economies shouldn't be growing on the basis of debt alone," Zapatero had said earlier in a speech that called for economic models to be overhauled so as to reduce imbalances in the world economy.
Spain's boom of the first eight years of the century had depended excessively on real estate development. The explosion of the property bubble in 2008 left its banks with billions of euros in bad loans and exposed a widespread loss of international competitiveness over the previous decade, reflected in a record-high current account deficit and a budget gap more than 10% of gross domestic product.
Elsewhere in his speech, Zapatero warned elsewhere against that collective efforts to prevent and tackle crises have tended to fall apart as the crisis passes, and warned against complacency.
"When a new passage of growth emerges, factors accumulate that would bring us back to another financial crisis," Zapatero said.
He also called for the introduction of a tax on international financial transactions, and for the Group of 20 industrial and developing nations to develop a framework for adopting decisions that will effectively bind its members, rather than depending on voluntary cooperation.
Zapatero told a panel at a Russian investment conference that the continent's long-term political commitment to integration and its awareness of a deep interdependence between member states would ensure that a political solution to the current crisis can be found.
However, he avoided any more direct answer to the question of whether Greece should be allowed to default. International ratings agencies have cut their ratings of Greece to the lowest level above "default" this week, increasingly convinced that it cannot manage its debt burden on its own, and doubtful of the willingness of its partners to keep helping it.
"I don't accept the short-term analysis," Zapatero said. "It's a snapshot that doesn't reflect the realities of the European project."
Zapatero promised that European Union leaders, who convene next week for a two-day summit that is sure to be dominated by the debt crisis, will support Greece with "reasonable measures", acceptable to financial markets.
But both he and Finnish President Tarja Halonen, addressing the same panel discussion, stressed the need for the private sector to show "common sense" and "responsibility."
A number of euro-zone states, led by Germany, have insisted that they won't finance additional aid to Greece unless private-sector creditors accept a "rolling-over" of current exposure, effectively waiving the right to have their bonds redeemed on schedule.
International ratings agencies have said they would be likely to consider any such agreement a default. That would have profound consequences, as the European Central Bank has said it would no longer be able to lend money against Greek government bonds in that case. The loss of ECB support could lead to an immediate collapse of the Greek banking system, which currently bridges an EUR85 billion funding gap with loans from the ECB.
At the same conference Friday, Deutsche Bank AG (DB, DBK.XE) chief executive Josef Ackermann had accepted the need for Greece's creditor banks to take an active role in resolving the crisis, but stressed that the austerity plan imposed upon Greece has to be supplemented with a broader plan to support growth there.
German Chancellor Angela Merkel and French President Nicolas Sarkozy pledged Thursday that they would work with the ECB to achieve a mutually acceptable solution, but it is still unclear whether Greece can meet its obligations until that solution is found, not least due to increasing political resistance to the austerity that its creditors have demanded of it.
Zapatero dismissed the notion that the euro as a whole is in crisis, and was supported in that opinion by Halonen.
Zapatero said that the essence of the crisis is in individual states' debts. Greece's troubles have led many market participants to fear contagion to other economies with debt problems, such as Spain's--although Spain's are largely concentrated in its banks rather than in its government.
He pledged that the euro zone would do a better job in future of observing the currency union's rules on budget discipline and competitiveness.
"What is the lesson we have learned? Economies shouldn't be growing on the basis of debt alone," Zapatero had said earlier in a speech that called for economic models to be overhauled so as to reduce imbalances in the world economy.
Spain's boom of the first eight years of the century had depended excessively on real estate development. The explosion of the property bubble in 2008 left its banks with billions of euros in bad loans and exposed a widespread loss of international competitiveness over the previous decade, reflected in a record-high current account deficit and a budget gap more than 10% of gross domestic product.
Elsewhere in his speech, Zapatero warned elsewhere against that collective efforts to prevent and tackle crises have tended to fall apart as the crisis passes, and warned against complacency.
"When a new passage of growth emerges, factors accumulate that would bring us back to another financial crisis," Zapatero said.
He also called for the introduction of a tax on international financial transactions, and for the Group of 20 industrial and developing nations to develop a framework for adopting decisions that will effectively bind its members, rather than depending on voluntary cooperation.
0 comments:
Post a Comment