EU announce plans to bail-out Greece's sovereign debt woes
(WSJ) BRUSSELS—Euro-zone countries will provide “determined and coordinated action if needed” to preserve stability in the currency union, European Council President Herman Van Rompuy said at a summit of European Union leaders Thursday, but he gave few details of how that would be provided and no indication that direct aid to Greece, the zone’s sickest member, was imminent. “Greece did not ask for any financial support,” Mr. Van Rompuy said. He and the 27 leaders of the EU countries were continuing their talks Thursday.
Greece’s fiscal problems—a heavy debt burden and wide fiscal deficits—have spurred fears of a sovereign default and sowed worry of serious trouble in the 16-nation euro zone. Thursday’s summit has become the bloc’s clearest opportunity to reassure financial markets. It wasn’t clear that investors would be soothed. The euro, which has gyrated for several days amid rising and falling hopes of help to Greece, slipped slightly after Mr. Van Rompuy appeared in front of the stately library where the leaders were meeting to read his statement.
Mr. Van Rompuy said Greece—which has been laboring to cut its spending—is adopting “additional measures” to get its budget in line. “We call on the Greek government to implement all these measures in a rigorous and effective manner,” Mr. Van Rompuy said. The EU president did underline that leaders saw the Greek troubles as a euro-zone problem, saying that countries that use the common currency have a “shared responsibility.”
The paucity of detail underlines how delicate a matter aid to Greece is. The euro zone is built around the idea that each nation manages its own fiscal affairs, subject to monitoring by the EU’s executive arm. A bailout of Greece would imply that a badly behaving nation—Greece for years violated rules against overspending—can be saved from the consequences.
Neither are the saviors happy. Germany, which as the bloc’s biggest and most stable economy would have to take the brunt of any bailout, has been wary. Helping its profligate peer is unpopular in thrifty Germany. But letting Greece default has risks, too—mostly for the stability of the euro—and EU leaders are deeply reluctant to let the International Monetary Fund extend help. Many in Brussels believe that would be an embarrassing sign of weakness. Read more here…