EU to spend €120 billion for growth
EU officials have
agreed to spend €120 billion “for immediate growth measures” to aid the
most vulnerable countries of the eurozone. The announcement comes during
the latest EU summit that has started in Brussels.
European
Council President Herman Van Rompuy made the announcement at a summit
press conference on Thursday. However, the latest reports from the
summit suggest that the leaders of Spain and Italy are blocking a final
agreement on a stimulus package until they win promises of immediate
help in reducing their borrowing costs, AP reports.
An
unnamed Italian official says his country’s government is linking the
finalizing of the pact to immediate measures to relieve Italy's
borrowing costs. A Spanish official says Madrid agrees with the growth
plan too, but wants short-term measures at the same time. Both spoke on
condition of anonymity while the closed-door talks are underway.
The
package includes a €10 billion capital increase for the European
Investment Bank as the centerpiece of the long-term growth plan. It also
includes infrastructure financing, tax-policy pledges and support of
small and medium-sized businesses.
It
was originally presented by French President Francois Hollande, German
Chancellor Angela Merkel, Italian Prime Minister Mario Monti and Spanish
Prime Minister Mariano Rajoy in Paris last week. Hollande pressed for
the EU growth pact during his election campaign as a balancing measure
to the fiscal pact on budgetary discipline backed by Merkel.
Earlier,
Van Rompuy and European Commission President Jose Manuel Barroso also
proposed creating a eurozone treasury to issue joint bonds to share the
burden of debt-troubled countries. The proposal has been repeatedly
ruled out by Angela Merkel, who is calling for the creation of a fiscal
union before any further debt sharing.
But
while the eurozone continues to shelter incompatible economies, giving
power away to “super bureaucrats” is unlikely to solve any problems,
points out MEP Nigel Farage.
“Basically,
[Van Rompuy] wants the European Union to become a debt union, which may
be acceptable to some of the southern countries who are effectively
bust. To the northern countries, it is not,” Farage told RT. “The focus
is always on Germany: will Chancellor Merkel blink or not?”
Klaus-Peter
Willsch, an MP from the German Bundestag said his country should not
bear financial responsibility for the rest of the eurozone.
“I
cannot explain to my voters why German savings and German tax should go
to financing deficits of other countries,” he told RT.
Willsch,
who is firmly against any further bailouts, explained that it had been
discussed and agreed at the very origins of introducing the euro
currency that each country in the eurozone would deal with its own
financial problems.
“We
erected a legal framework which said strictly each country has to take
care of its own budget, each country has to take care or has to limit
deficits in their government budget, and there will be no bailout,” he
said.
EU
leaders will also focus on creating a banking union as a fundamental
step towards fiscal integration. They propose the setting up of a single
European banking supervisor, as well as working out a common deposit
guarantee scheme and a single bank resolution fund to stabilize EU
banking.
Both
Italy and Spain have been pressing other European countries to
intervene in the bond markets to bring down their borrowing costs before
they are expelled from the market. However, it still remains in
question whether EU leaders are eager to begin such purchases.
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