Europe Has Tools, Ability to Overcome Debt Crisis, Barroso Says
Feb. 24 (Bloomberg) -- Europe can solve the “huge difficulties and enormous challenges” presented by its sovereign debt crisis, European Commission President Jose Barroso said.
“We are faced with extraordinary challenges,” Barroso said in the draft of a speech due to be delivered at Hamburg’s town hall today, noting that it has become commonplace to consider the crisis as the most serious since the Second World War. While emphasizing that the crisis is, indeed, serious, he added that “we do have the potential and the means to overcome it.”
Debt-stricken Greece won a second bailout this week, as European finance ministers granted 130 billion euros ($175 billion) in aid, engineered a central-bank profits transfer and coaxed investors into providing more debt relief in an exchange meant to tide Greece past a March bond repayment. Greece met a key condition for aid by spelling out 325 million euros in additional spending cuts, the latest round of the measures that have provoked street protests in Athens.
“I know some very tough decisions will need to be taken, however, it is a distortion of the reality to say that the program has worsened the situation in Greece,” Barroso said.
He added that there also is no alternative to consolidating public debt to avoid a “hugely damaging uncontrolled default.”
“The program is ultimately not about austerity,” the EU official said. “It is about restoring stability to Greek public finances and creating the conditions for sustainable lasting growth.”
Europe’s second bailout for Greece brings to at least 386 billion euros the sums spent or committed to save Greece, Ireland and Portugal from bankruptcy, and to insulate Europe from a ruinous financial cascade that might endanger its 13- year-old monetary union by dragging down Spain or Italy.
“What’s at stake today is more than fixing a minus balance sheet, more than correcting a public deficit, more than saving Greece -- Europe is passing a historical test,” Barroso said.
“The world at large wants to know whether Europe, and the euro area in particular, are able to solve a problem which in relation to its overall size and economic force is a relatively minor one,” Barroso said. “In other words, they want to know whether we want to exist as Europe.”
--Editor: James Kraus
To contact the reporter on this story: Niklas Magnusson in Hamburg at email@example.com
To contact the editor responsible for this story: Angela Cullen at firstname.lastname@example.org