Frantic EU seeks solution to Greek debt crisis

BRUSSELS — The sinking euro and a downgrade of Portugal’s debt put renewed pressure on European leaders today to come up with a bailout plan for Greece and stem the government debt crisis undermining their shared currency.

But agreement remained elusive as a Thursday summit approached. Markets increasingly expect any bailout for Greece to involve the International Monetary Fund — and EU governments are discussing whether they would permit that and add financial help from eurozone nations.

Germany is holding back a deal, reluctant to put taxpayer money on the line for Greece. But failure to help an indebted eurozone country would be an admission that Europe can’t halt the crisis in its currency union.

The latest vote of no confidence in vulnerable eurozone economies came with Fitch Ratings’ downgrade Wednesday of Portugal’s debt. The credit ratings agency said Portugal’s prospects for recovery were weaker than others in the eurozone and it faces problems shrinking its budget deficit.

The euro hit a 10-month low against the U.S. dollar on Wednesday on the Portuguese downgrades and the uncertainty over Europe’s dithering over Greece — which says it will need eurozone or IMF help if markets keep charging it painfully high costs to borrow.

Greece’s debt crisis has undermined the euro by showing that the rules supporting it have not prevented governments from overspending, hitting public accounts. Athens’ woes are also putting pressure on other eurozone countries with troubled finances, such as Portugal and Spain.

European diplomats speaking on condition of anonymity said Spain’s Jose Luis Rodriguez Zapatero is heading efforts to get the 16 eurozone nations to meet separately Thursday on the crisis surrounding Greece, in addition to the meeting by all 27 EU member governments.

Eurozone leaders have only met once for a summit before at the height of the banking crisis in 2008. “He is pushing hard for this and we think it is going to happen,” said the diplomat.

EU President Herman Van Rompuy is also asking for a eurozone summit, said another EU official. He met French President Nicolas Sarkozy in Paris on Wednesday, Sarkozy’s office said.

However, Germany is not keen, with a senior government official in Berlin saying “for us, there is no decision at this summit on aid to Greece.”

He said aid “comes into question only as a last resort” when Greece has exhausted all efforts to raise money from bond markets.

The German government wants the IMF to be “significantly involved” in any bailout because it believes that it could face a legal challenge from the country’s powerful constitutional court unless it can prove that that any European or German aid is the last option left to Greece.

European Commission President Jose Manuel Barroso said EU leaders were facing a test of their commitment to the currency union and should set up “a safety net to be used only in case all other means to avoid the crisis have been exhausted.”

“What is at stake is the essential principle of financial stability that is at the center of the euro, and the euro is the most important creation of the European project,” he told the European Parliament.

He hinted that IMF help would be acceptable but said it needs to be with the EU’s blessing “embedded into a giant European framework.”

Greek government spokesman George Petalotis also said Greece was waiting for a detailed EU plan that would “exert influence in such a way that our country can borrow, when it requires money.”

He stressed that Greece was “not seeking financial help from anyone” but needed an option to avoid crippling interest rates that are undermining Greek efforts to shave billions of euros from its budget this year.

The countries that use the euro pledged last month to help Greece if the stability of the currency zone were threatened — but agreed no details. Germany says it doesn’t need to fulfill that promise yet, especially not to save Greece from years of overspending and faking its budget numbers.

German Chancellor Angela Merkel saw no reason to move quickly, saying Sunday that EU leaders shouldn’t discuss a potential bailout at the two-day summit starting Thursday because Greece is not yet asking for help and is not on the verge of bankruptcy.

Merkel is also pressing for tough new rules to restrain deficit spending by eurozone members to prevent future debt crises.

Germany’s economy minister Rainer Bruederle repeated that position Wednesday, telling the daily Passauer Neue Presse that “aid for Greece would be the wrong signal. We must not create a precedent that other eurozone countries can refer to in the future.”

“It cannot be possible that German taxpayers have to pick up the bill for mismanagement in Greece and elsewhere,” he said.

Talk to us

More in Herald Business Journal

Everett Community College's Dennis Skarr sits in front of a 15-foot interactive wall that can replicate a manufacturing company's assembly line, hardware, software and networks on Wednesday, Nov. 24, 2021 in Everett, Washington. A class taught by Skarr focuses on cyber threats against manufacturers, pipelines, water treatment systems and electrical grids.(Andy Bronson / The Herald)
At EvCC, ‘The Wall’ teaches students how to thwart cyber crime

The Everett college is first in the nation to have a tool that can model cyber attacks aimed at vital infrastructure.

Double Barrel owner Lionel Madriz places a wine sale sign outside of his business on Friday, Nov. 19, 2021 in Snohomish, Wa. (Olivia Vanni / The Herald)
Job-seekers today are choosy, forcing employers to adapt

If they even show up, prospective employees are calling the shots. First question: What’s the pay?

The Lab@Everett director Diane Kamionka stands outside the Lab's new home at the Angel of the Winds Arena on Monday, Nov. 29, 2021 in Everett, Washington. When Everett Community College tore down the Broadway mall to make room for its new Cascade Resource Learning Center, The Lab@everett, a business accelerator, also succumbed to the bulldozer. However, the city of Everett found a new home for the TheLab, which serves entrepreneurs and startups: the Angel of the Winds Arena. (Andy Bronson / The Herald)
Everett business incubator finds a sporty new home

TheLab@everett, an innovation center for entrepreneurs, has relocated to Angel of the Winds Arena.

An illustration of the TerraPower Natrium nuclear-power plant planned for Kemmerer, Wyoming. (TerraPower) 20211201
TerraPower plans to build demo nuclear reactor in Wyoming

The firm, which operates a research facility in Everett, is developing an electricity-generating plant.

Local aero firms get $4.5 million from feds to protect jobs

Federal Aviation Manufacturing Jobs Protection Program grants were awarded to six Snohomish County employers.

Carpenters from America and Switzerland build the first "modular home" made from cross-laminated timber, inside a warehouse on Marine View Drive on Tuesday, Nov. 30, 2021 in Everett, Washington.  (Andy Bronson / The Herald)
Affordable housing’s future? Innovative home built in Everett

Swiss and American carpenters built the nation’s first “modular home” made of cross-laminated timber.

FAA Administrator Steve Dickson speaks to lawmakers as Michael Stumo, holding a photo of his daughter Samya Rose Stumo, and his wife Nadia Milleron, sit behind him during a Senate Committee on Commerce, Science, and Transportation hearing on the implementation of aviation safety reform at the US Capitol in Washington on Wednesday, Nov. 3, 2021. Samya Stumo was among those killed in a Boeing 737 Max 8 crash in 2019. (AP Photo/Amanda Andrade-Rhoades)
Democrats push FAA for action against certain Boeing 737 Max employees

Rep. Rick Larsen co-signed the letter stating concerns over the “absence of rigorous accountability.”

FILE - In this June 12, 2017, file photo, a Boeing 787 airplane being built for Norwegian Air Shuttle is shown at Boeing Co.'s assembly facility, in Everett, Wash. Boeing is dealing with a new production problem involving its 787 jet, in which inspections have found flaws in the way that sections of the rear of the plane were joined together. Boeing said Tuesday, Sept. 8, 2020, it's not an immediate safety risk but could cause the planes to age prematurely. (AP Photo/Ted S. Warren, File)
FAA memo reveals more Boeing 787 manufacturing defects

The company said the problems do not present an immediate safety-of-flight issue.

Homes in The Point subdivision border the construction of the Go East Corp. landfill on Wednesday, Nov. 10, 2021 in Everett, Wa. (Olivia Vanni / The Herald)
Mudslide briefly stalls housing project at former Everett landfill

The slide buried two excavators in September. Work has resumed to make room for nearly 100 new houses.

Ameé Quiriconi, Snohomish author, podcaster and entrepreneur.  (Kevin Clark / The Herald)
Snohomish author’s handbook charts a course for female entrepreneurs

She’s invented sustainable concrete, run award-winning wedding venues and worked in business… Continue reading

A final environmental cleanup is set to begin next year at the ExxonMobil and ADC properties, neighboring the Port of Everett. Photo courtesy of the Washington State Department of Ecology.
Port of Everett to get $350K for its costs in soil clean-up

The end is finally in sight for a project to scrub petroleum from two waterfront parcels, owned by ExxonMobil and ADC.

Shawn Loring, owner of Lazy Boy Brewing, received $10,000 through Everett's federal CARES Act funding.  (Kevin Clark / The Herald)
Everett, Snohomish breweries to open on Everett waterfront

Lazy Boy Brewing and Sound to Summit see a bright future at the port’s Waterfront Place.