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.
Olympics Construction Scars Sacred Korean Mountaini
X
July 02, 2015 4:10 AM
Environmentalists in South Korea are protesting a Winter Olympics construction project to build a ski slope through a 500-year-old protected forest. Brian Padden reports that although there is strong national support for hosting the 2018 Pyeongchang Winter Olympics, there are growing public concerns over the costs and possible ecological damage at the revered mountain.
Video

Video Olympics Construction Scars Sacred Korean Mountain

Environmentalists in South Korea are protesting a Winter Olympics construction project to build a ski slope through a 500-year-old protected forest. Brian Padden reports that although there is strong national support for hosting the 2018 Pyeongchang Winter Olympics, there are growing public concerns over the costs and possible ecological damage at the revered mountain.
Video

Video Xenophobia Victims in South Africa Flee Violence, Then Return

Many Malawians fled South Africa early this year after xenophobic attacks on African immigrants. But many quickly found life was no better at home and have returned to South Africa – often illegally and without jobs, and facing the tough task of having to start over. Lameck Masina and Anita Powell file from Johannesburg.
Video

Video Family of American Marine Calls for Release From Iranian Prison

As the crowd of journalists covering the Iran talks swells, so too do the opportunities for media coverage.  Hoping to catch the attention of high-level diplomats, the family of American-Iranian marine Amir Hekmati is in Vienna, pleading for his release from an Iranian prison after nearly 4 years.  VOA’s Heather Murdock reports from Vienna.
Video

Video UK Holds Terror Drill as MPs Mull Tunisia Response

After pledging a tough response to last Friday’s terror attack in Tunisia, which came just days before the 10th anniversary of the bomb attacks on London’s transport network, British security services are shifting their focus to overseas counter-terror operations. VOA's Henry Ridgwell has more.
Video

Video Obama on Cuba: This is What Change Looks Like

President Barack Obama says the United States will soon reopen its embassy in Cuba for the first time since 1961, ending a half-century of isolation. VOA White House correspondent Luis Ramirez reports.
Video

Video Hate Groups Spread Influence Via Internet

Hate groups of various kinds are using the Internet for propaganda and recruitment, and a Jewish human rights organization that monitors these groups, the Simon Wiesenthal Center, says their influence is growing. The messages are different, but the calls to hatred or violence are similar. VOA's Mike O’Sullivan reports.
Video

Video US Silica Sand Mining Surge Worries Illinois Residents, Businesses

Increased domestic U.S. oil and gas production, thanks to advances known as “fracking,” has created a boom for other industries supporting that extraction. Demand for silica sand, used in fracking, could triple over the next five years. In the Midwest state of Illinois, people living near the mines are worried about how increased silica sand mining will affect their businesses and their health. VOA’s Kane Farabaugh has more in this first of a series of reports.
Video

Video Blind Somali Journalist Defies Odds in Mogadishu

Despite improving security in the last few years, Somalia remains one of the most dangerous countries to be a journalist – even more so for someone who cannot see. Abdulaziz Billow has the story of journalist Abdifatah Hassan Kalgacal, who has been reporting from the Somali capital for the last decade despite being blind.
Video

Video Texas Defies Same-Sex Marriage Ruling

Texas state officials have criticized the US Supreme Court decision giving same-sex couples the right to marry nationwide. The attorney general of Texas says last week's decision did not overrule constitutional "rights of religious liberty," and therefore officials performing wedding services can refuse to perform them for same-sex couples if it is against their religious beliefs. Zlatica Hoke reports on the controversy.
Video

Video Rabbi Hits Road to Heal Jewish-Muslim Relations in France

France is on high alert after last week's terrorist attack near the city Lyon, just six months after deadly Paris shootings. The attack have added new tensions to relations between French Jews and Muslims. France’s Jewish and Muslim communities also share a common heritage, though, and as far as one French rabbi is concerned, they are destined to be friends. From the Paris suburb of La Courneuve, Lisa Bryant reports about Rabbi Michel Serfaty and his friendship bus.
Video

Video Saudi Leaks Expose ‘Checkbook Diplomacy’ In Battle With Iran

Saudi Arabia’s willingness to wield its oil money on the global diplomatic stage appears to have been laid bare, after the website WikiLeaks published tens of thousands of leaked cables from Riyadh’s Ministry of Foreign Affairs. VOA's Henry Ridgwell reports.
Video

Video In Kenya, Police Said to Shoot First, Ask Questions Later

An organization that documents torture and extrajudicial killings says Kenyan police were responsible for 1,252 shooting deaths in five cities, including Nairobi, between 2009 and 2014, representing 67 percent of all gun deaths in the areas reviewed. Gabe Joselow has more from Nairobi.

VOA Blogs