News

Europe Ministers Reach Deal on Trillion-Dollar 'Firewall'

European Central Bank President Mario Draghi, takes his seat during the informal EU-meeting for EU Finance Ministers, in Copenhagen, Denmark, March 30 2012.
European Central Bank President Mario Draghi, takes his seat during the informal EU-meeting for EU Finance Ministers, in Copenhagen, Denmark, March 30 2012.

European ministers meeting in Copenhagen have agreed to create a permanent fund for the eurozone to help it recover from its debt crisis with temporary lending capacity of more than $1 trillion. The eurozone nations are working to ensure that the economic crisis does not spill over into Spain and Italy.

It is the most recent step taken by Europe to show the markets that they can cope with the economic crisis hitting a number of its member states.

The decision means that a financial rescue fund (firewall) worth around $1 trillion will be available for future loans.

In a statement, the group of 17 finance ministers said that finally “robust firewalls have been been established.”

Earlier in the day, European Union Economics Minister Olli Rehn said Europe has made a lot of progress towards safeguarding its economies. "We have made significant progress in the recent weeks and months in terms of fiscal consolidation and in terms of reinforcing our economic governance," he said. "Now it is time to complete the crisis response by further reinforcement of the euro area financial firewall."

But going into the talks, there was some controversy about the size of the emergency fund.

The eurozone’s largest economy, Germany, has been averse to raising the bar so high. France, on the other hand, has been more forthcoming.

French Finance Minister Francois Baroin said the higher the firewall, the greater the deterrence against instability in the markets.

What Europe’s ministers ended with was a hike -- but analysts say it may not be enough to calm the markets.

Earlier this week, the Organization for Economic Cooperation and Development said the bailout fund should be raised to $1.3 trillion -- more than Friday’s agreed sum. The fund was previously worth around $650 billion.

The new figure was partly reached by combining money already pledged into one fund.
Austrian Finance Minister Maria Fekter told reporters that the eurozone is now much stronger than it was a few months ago.

Simon Tilford is chief economist at the Center for European Reform, a London-based research group that campaigns for European integration.

He says Europe’s reaction to its economic crisis is not working. What is needed, he says, is a federalized system where resources cross borders more freely.

"I think what needs to happen is that the governments need to accept that a currency union requires a much closer degree of integration than they have been hitherto prepared to acknowledge. So they need some kind of federal budget -- the kind of federal budget that effectively transfers funds between the states of the U.S., for example." said Tilford.

Spain’s government is set to reveal a new 2012 budget Friday that is expected to make billions of dollars in cuts.

On Thursday, workers went on strike across Spain to protest the cuts, high unemployment rates and new labor laws.

The Spanish government insists it will not need to be bailed out by its euro neighbors. Speaking in Copenhagen Friday, Spain’s economy minister said the new Spanish budget will convince euro leaders and the markets that Spain can cope with its debts and create growth in the Spanish economy.

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Expelled from Pakistan, Afghan Refugees Return to Increased Hardshipi
X
Ayesha Tanzeem
May 28, 2015 6:48 PM
Undocumented refugees returning to Afghanistan from Pakistan have no jobs, no support system, and no home return to, and international aid agencies say they and the government are overwhelmed and under-resourced. Ayesha Tanzeem has more from Kabul.
Video

Video Expelled from Pakistan, Afghan Refugees Return to Increased Hardship

Undocumented refugees returning to Afghanistan from Pakistan have no jobs, no support system, and no home return to, and international aid agencies say they and the government are overwhelmed and under-resourced. Ayesha Tanzeem has more from Kabul.
Video

Video Britain Makes Controversial Move to Crack Down on Extremism

Britain is moving to tighten controls on extremist rhetoric, even when it does not incite violence or hatred -- a move that some are concerned might unduly restrict basic freedoms. It is an issue many countries are grappling with as extremist groups gain power in the Middle East, fueled in part by donations and fighters from the West. VOA’s Al Pessin reports from London.
Video

Video Floodwaters Recede in Houston, but Rain Continues

Many parts of Texas are recovering from one of the worst natural disasters to hit the southwestern state. Heavy rains on Monday and early Tuesday caused rivers to swell in eastern and central Texas, washing away homes and killing at least 13 people. As VOA’s Greg Flakus reports from Houston, floodwaters are receding slowly in the country's fourth-largest city, and there likely is to be more rain in the coming days.
Video

Video 3D Printer Makes Replica of Iconic Sports Car

Cars with parts made by 3D printers are already on the road, but engineers are still learning about this new technology. While testing the possibility of printing an entire car, researchers at the U.S. Department of Energy recently created an electric-powered replica of an iconic sports roadster. VOA’s George Putic has more.
Video

Video Al-Shabab Recruitment Drive Still on In Kenya

The al-Shabab militants that have long battled for control of Somalia also have recruited thousands of young people in Kenya, leaving many families disconsolate. Mohammed Yusuf recently visited the Kenyan town of Isiolo, and met with relatives of those recruited, as well as a many who have helped with the recruiting.
Video

Video US Voters Seek Answers From Presidential Candidates on IS Gains

The growth of the Islamic State militant group in Iraq and Syria comes as the 2016 U.S. presidential campaign kicks off in the Midwest state of Iowa.   As VOA’s Kane Farabaugh reports, voters want to know how the candidates would handle recent militant gains in the Middle East.
Video

Video A Small Oasis on Kabul's Outskirts Provides Relief From Security Tensions

When people in Kabul want to get away from the city and relax, many choose Qargha Lake, a small resort on the outskirts of Kabul. Ayesha Tanzeem visited and talked with people about the precious oasis.
Video

Video Film Festival Looks at Indigenous Peoples, Culture Conflict

A recent Los Angeles film festival highlighted the plight of people caught between two cultures. Mike O'Sullivan has more on the the Garifuna International Film Festival, a Los Angeles forum created by a woman from Central America who wants the world to know more about her culture.
Video

Video Kenyans Lament Losing Sons to al-Shabab

There is agony, fear and lost hope in the Kenyan town of Isiolo, a key target of a new al-Shabab recruitment drive. VOA's Mohammed Yusuf visits Isiolo to speak with families and at least one man who says he was a recruiter.
Video

Video Scientists Say Plankton More Important Than Previously Thought

Tiny ocean creatures called plankton are mostly thought of as food for whales and other large marine animals, but a four-year global study discovered, among other things, that plankton are a major source of oxygen on our planet. VOA’s George Putic reports.
Video

Video Kenya’s Capital Sees Rise in Shisha Parlors

In Kenya, the smoking of shisha, a type of flavored tobacco, is the latest craze. Patrons are flocking to shisha parlors to smoke and socialize. But the practice can be addictive and harmful, though many dabblers may not realize the dangers, according to a new review. Lenny Ruvaga has more on the story for VOA from Nairobi, Kenya.
Video

Video Iowa Family's Sacrifice Shaped US Military Service for Generations

Few places in America have experienced war like Waterloo. This small town in the Midwest state of Iowa became famous during World War II not for what it accomplished, but what it lost. As VOA’s Kane Farabaugh reports, the legacy of one family’s sacrifice is still a reminder today of the real cost of war for all families on the homefront.

VOA Blogs