Germany will consider all ideas on bolstering euro area growth, Finance Minister Wolfgang Schaeuble said as he and his French counterpart, Pierre Moscovici, sought to fashion a new strategy amid the Greek electoral impasse.
“We will engage all ideas constructively and find solutions in order to strengthen sustainable growth,” Schaeuble said after meeting Moscovici for the first time Monday in Berlin. Moscovici, who became finance minister last week, said President Francois Hollande wants “everything on the table,” including joint euro-area bonds, at a meeting of European leaders two days from now.
The French push for growth comes as euro heads of state and government grapple with political support in Greece for parties which oppose the terms of the bailout the country has received from its partners. Group of Eight leaders on Saturday urged Greece to stay within the euro area as polls in the country showed a close race between parties supporting and opposing the EU’s bailout deal.
Greece is preparing for June 17 elections, following an inconclusive May 6 ballot. Spain, which has the euro region’s third-largest budget deficit, revised its 2011 deficit upward -- even as its borrowing costs approached levels that prompted bailouts in Greece, Ireland and Portugal.
Alexis Tsipras, leader of Greece’s anti-bailout Syriza party, said Monday in Paris that a Greek exit from the euro would probably destroy the 17-nation currency bloc and that German Chancellor Angela Merkel must understand that Greece cannot take more austerity.
“She must understand she can’t act as if there are protectorates at the service of their creditors,” he said. “What we will discuss is a new way of creating Europe.”
Two More Years
The euro has lost 3.5 percent against the U.S. dollar this month and almost $4 trillion has been wiped from equity markets amid concerns over Greece. Schaeuble said May 18 the turmoil could last another two years. The euro is down from this year’s high of $1.3487 on Feb. 24. It slipped 0.1 percent to $1.2765 as of 4:22 p.m. London time.
President Barack Obama joined G-8 leaders including Hollande and Britain’s Prime Minister David Cameron in embracing a renewed focus on growth, underlining the isolation of Merkel, who maintained resistance to new spending. At the president’s Camp David retreat in Maryland, G-8 leaders said in their final statement that “the right measures are not the same for each of us.”
French Prime Minister Jean-Marc Ayrault told Liberation that no potential solutions involving Greece should be rejected. Leaders shouldn’t rule out measures such as state borrowing from the European Central Bank, he said.
Two weeks after elections in Greece yielded political deadlock and forced the once-taboo notion of leaving the monetary union into political discussion, euro leaders grappled with the possible fallout of such a scenario. Caretaker Prime Minister Panagiotis Pikrammenos will oversee a government that will prepare for a new election.
Opinion polls over the weekend gave a split message on the outcome, with two pointing to victory for New Democracy, which backs the international bailout program, and two favoring Syriza, which opposes it.
Luxembourg Prime Minister Jean-Claude Juncker, who heads a group of European finance ministers, said a majority of his peers have doubts about Greece’s membership of the euro, Der Spiegel reported, without saying where it got the information.
“We now have to send a very clear message to people in Greece,” Cameron said Sunday as he attended a NATO summit in Chicago. “You can either vote to stay in the euro, with all the commitments you’ve made, or, if you vote another way, you’re effectively voting to leave.”
European Central Bank Executive Board member Joerg Asmussen, speaking in Berlin Monday, said that policy makers should stick to “plan A,” keeping Greece in the euro. He said he didn’t want to speculate on a “plan B.”
“What’s the alternative? My preference is that Greece stay in the euro,” Asmussen said.
© Copyright 2024 Bloomberg News. All rights reserved.