European Union finance ministers have promised to counter the ‘wolfpack’ of the financial markets and defend the euro.
The European Commission is presenting to the ministers a proposal for a stabilisation mechanism intended to provide a multi-billion euro safety net for other eurozone countries with bloated public finances such as Portugal, Spain or Ireland.
Financial markets have been punishing eurozone members with high deficits or debts as well as low economic growth, threatening to plunge them into Greece's plight.
‘We now see. . . wolfpack behaviours, and if we will not stop these packs, even if it is self-inflicted weakness, they will tear the weaker countries apart,’ Swedish Finance Minister Anders Borg told reporters on arrival for the meeting.
British Finance Minister Alistair Darling stressed the need to stabilise the markets, while ministers from France, Spain, Finland and other eurozone states vowed to defend the currency.
However, Mr Darling said Britain would not provide support for the euro.
'We wouldn't participate in a European bailout fund,’ a British diplomat said earlier.
‘We are going to defend the euro. . . we have to give more stability to our guarantee,’ Spanish Economy Minister Elena Salgado said before the emergency meeting, held before markets open tomorrow.
She added that Madrid, labouring under debts exacerbated by the bloc's highest rate of unemployment - and, like Greece and Portugal, facing a squeeze on international money markets - would not call on a planned new common bailout fund.
US President Barack Obama and German Chancellor Angela Merkel spoke by phone about the importance of EU members acting to build confidence in markets, a White House spokesman said.
EU finance ministers are attempting to nail down a ‘watertight’ defence against predatory threats to euro governments, commercial banks and wider economic recovery.
An EU diplomat said that a kind of ‘bank’ would be set up with unused funds from the bloc's budget, which would then serve as ‘base capital on which to borrow €60bn to €70bn on the bond market.’
Guarantees offered by member states would see the interest rates kept low, the source stressed.
Meanwhile, the International Monetary Fund's board has approved a €30bn loan for Greece, part of a bigger €110bn bailout package for the debt-stricken country.
In a brief statement, the IMF said its board of member countries had approved the three-year standby loan agreement during a special session.
