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24th Feb 2024

Eurozone ministers to flesh out EU summit promises

  • Urpilainen annoyed Monti by criticising the summit deal in national media (Photo: consilium.europa.eu)

Eurozone finance ministers gather in Brussels on Monday evening (9 July) to try to firm up political promises made at last month's summit, even as member states trade barbs about the nature of the euro-saving deal.

The meeting comes just 10 days after EU leaders made what was judged at the time as significant progress towards shoring up the euro, by agreeing to allow eurozone aid to flow directly to troubled banks and to give the European Central Bank a supervisory role in the euro area.

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But the gloss came off the deal soon afterwards as markets digested the complexities involved in getting to direct bank recapitisation and as Finland and the Netherlands cast doubts on key aspects of the agreement.

The doubts have seen Spain and Italy's borrowing costs once again soar to almost unsustainable levels.

"It's time to go from words to deeds. Europe must comply as quickly as possible with the agreements its leaders reached in Brussels. The European project is at stake," said Spanish Prime Minister Mariano Rajoy on Saturday announced, while announcing extra deficit-cutting measures.

Meanwhile, Prime Minister Mario Monti rebuked Helsinki and The Hague for causing confusion.

"We don't undo unilaterally what we laboriously put together collectively," he said while visiting France on Sunday.

"Spreads have widened again because of several factors. I believe this includes some comments which I personally think are inappropriate from political authorities, notably from Nordic countries."

With the June summit deal leaving many details unclear and finance ministers having to fill in the blanks while taking into account the conflicting interests of the biggest eurozone states, there is already talk of another meeting on 20 July.

A key open question is whether individual countries or the eurozone will take on liability for banks which are rescued by the bailout fund.

There is a stack of other issues to deal with on Monday as well.

Ministers will discuss whether twice-bailed-out Greece is on track with its reform programme. Its next tranche of money depends on whether its eurozone partners consider it is carrying out enough reforms.

Details of the Spanish bank bailout and of Cyprus' request for a rescue package are also expected to be discussed.

EU and International Monetary Fund officials visited the island last week to look over its books. The analysis will determine the size of the loan and the reform conditions attached to it. Nicosia's low corporate tax rate and wage indexation - both of which it is keen to keep - are set to be among the biggest discussion points.

There may also be a debate on who should succeed eurozone chief Jean-Claude Juncker due to step down on 17 July.

Juncker has indicated several times that this is his last term, but finding a replacement suitable to all eurozone heads has proved difficult.

Der Spiegel reported over the weekend that the Luxembourg leader may be replaced by German finance minister Wolfgang Schauble in 2013 and his French counterpart, Pierre Moscovici, the following year.

"I don't know where this rumour came from, but for now it is not on the cards," said Moscovici.

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