News / Economy

Europe Scrambles to Contain Debt Problems

French finance minister Francois Baroin, right, listens to U.S. treasury secretary Timothy Geithner, left, during talks in Marseille. Finance Ministers from the Group of Seven leading economies gathered in France amid jitters about Europe's debt crisis a
French finance minister Francois Baroin, right, listens to U.S. treasury secretary Timothy Geithner, left, during talks in Marseille. Finance Ministers from the Group of Seven leading economies gathered in France amid jitters about Europe's debt crisis a

French, German and Greek leaders are scheduled to hold a conference call Wednesday on how to contain Europe's deepening financial crisis that also is triggering alarm in other continents.

The call by leaders of Europe's two largest economies - France and Germany - to its weakest, Greece, underscores deepening worries about the region's financial troubles.

It comes ahead of a Friday meeting by finance ministers from the 17 nations sharing the euro currency to address a debt crisis that began with Greece, Portugal and Ireland, and now risks dragging in Italy and Spain.

U.S. Treasury Secretary Timothy Geithner is attending the talks for the first time, amid signs the crisis might also spread overseas.

In remarks to American news station CNBC, Geithner said European leaders are aware they need to do more to earn international confidence.

Fabian Zuleeg, chief economist at the Brussels-based European Policy Center, says the United States is right to be concerned. "The intervention from the U.S. has also shown, at least a risk that the stability of the financial system as a whole - the global financial system - might be under threat again," he said. "That we might have a financial situation where a possible default of Greece might have knock-on effects around the world as well."

On Wednesday, Italy's lower house approved a new austerity plan that would cut the country's deficit by more than $70 billion over three years. But underscoring market fears, Rome was forced this week to sell bonds at record interest rates.

In another signal of market jitters, the Moody's rating agency downgraded two major French banks that are large holders of Greek government bonds.

Greece is under pressure to make good its austerity promises in return for getting more rescue funds. But analysts believe European governments sharing the euro currency also must agree to closer economic unity if the eurozone is to remain viable.

In remarks before the European Parliament Wednesday, European Commission President Jose Manuel Barroso said the commission will propose creating "eurobonds" as a way for eurozone governments to jointly guarantee their debts.

"I am convinced we need a deeper and more results-driven integration. And let me be clear, this has to be within the community system. A system based purely on intergovernmental cooperation has not worked in the past and will not work in the future," Barroso stated.

Chances that the eurozone might fall apart were once dismissed as unlikely.

Now, analysts like Zuleeg say it's a real possibility. "I don't think a very orderly exit of a single country is a very likely scenario. I think it is much more likely that we either have the eurozone holding together or we get a chaotic process where other countries come under pressure as soon as one of the countries, such as Greece, says they can no longer pay their debt," he said.

Experts say economic growth also is needed for Greece and other debt-strapped nations to rebound.

But last week, the Paris-based Organization for Economic Cooperation and Development downgraded its growth estimates for the euro area and the Greek economy has shrunk this year.

You May Like

French Refugee Drama Wins Cannes Top Prize

Dheepan is about a group of Sri Lankan refugees who pretend to be a family in order to flee their war-torn country for a housing project in France More

Photogallery Crisis in Macedonia Requires Meaningful and Swift Measures

The international community has called on Macedonian leadership to take concrete measures in support of democracy in order to exit the crisis More

Activists: IS Executes 217 Civilians, Soldiers Near Palmyra

British-based Syrian Observatory for Human Rights on Sunday said the victims include nurses, women, children and Syrian government fighters More

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.
Turkey's Main Opposition Party Hopes for Election Breakthroughi
X
May 22, 2015 10:23 AM
Turkey’s main opposition Republican People’s Party has sought an image change ahead of the June 7 general election. The move comes after suffering successive defeats at the hands of the Islamist-rooted AK Party, which has portrayed it as hostile to religion. Dorian Jones reports from the western city of Izmir.
Video

Video Turkey's Main Opposition Party Hopes for Election Breakthrough

Turkey’s main opposition Republican People’s Party has sought an image change ahead of the June 7 general election. The move comes after suffering successive defeats at the hands of the Islamist-rooted AK Party, which has portrayed it as hostile to religion. Dorian Jones reports from the western city of Izmir.
Video

Video Europe Follows US Lead in Tackling ‘Conflict Minerals’

Metals mined from conflict zones in places like the Democratic Republic of Congo are often sold by warlords to buy weapons. This week European lawmakers voted to force manufacturers to prove that their supply chains are not inadvertently fueling conflicts and human rights abuses. Henry Ridgwell reports from London.
Video

Video Class Tackles Questions of Race, Discrimination

Unrest in some U.S. cities is more than just a trending news item at Ladue Middle School in St. Louis, Missouri. As VOA’s Kane Farabaugh reports, it’s a focus of a multicultural studies class engaging students in wide-ranging discussions about racial tensions and police aggression.
Video

Video Mind-Controlled Prosthetics Are Getting Closer

Scientists and engineers are making substantial advances towards the ultimate goal in prosthetics – creation of limbs that can be controlled by the wearer’s mind. Thanks to sophisticated sensors capable of picking up the brain’s signals, an amputee in Iceland is literally bringing us one step closer to that goal. VOA’s George Putic reports.
Video

Video Afghan Economy Sinks As Foreign Troops Depart

As international troops prepare to leave Afghanistan, and many foreign aid groups follow, Afghans are grappling with how the exodus will affect the country's fragile economy. Ayesha Tanzeem reports from the Afghan capital, Kabul.
Video

Video Poverty, Ignorance Force Underage Girls Into Marriage

The recent marriage of a 17-year old Chechen girl to a local police chief who was 30 years older and already had a wife caused an outcry in Russia and beyond. The bride was reportedly forced to marry and her parents were intimidated into giving their consent. The union spotlighted yet again the plight of many underage girls in developing countries. Zlatica Hoke reports poverty, ignorance and fear are behind the practice, especially in Asia and Africa.
Video

Video South Korea Marks Gwangju Uprising Anniversary

South Korea this week marked the 35th anniversary of a protest that turned deadly. The Gwangju Uprising is credited with starting the country’s democratic revolution after it was violently quelled by South Korea’s former military rulers. But as Jason Strother reports, some observers worry that democracy has recently been eroded.
Video

Video California’s Water System Not Created To Handle Current Drought

The drought in California is moving into its fourth year. While the state's governor is mandating a reduction in urban water use, most of the water used in California is for agriculture. But both city dwellers and farmers are feeling the impact of the drought. Some experts say the state’s water system was not created to handle long periods of drought. Elizabeth Lee reports from Ventura County, an agricultural region just northwest of Los Angeles.
Video

Video How to Clone a Mammoth: The Science of De-Extinction

An international team of scientists has sequenced the complete genome of the woolly mammoth. Led by the Swedish Museum of Natural History in Stockholm, the work opens the door to recreate the huge herbivore, which last roamed the Earth 4,000 years ago. VOA’s Rosanne Skirble considers the science of de-extinction and its place on the planet
Video

Video Blind Boy Defines His Life with Music

Cole Moran was born blind. He also has cognitive delays and other birth defects. He has to learn everything by ear. Nevertheless, the 12-year-old has had an insatiable love for music since he was born. VOA’s June Soh introduces us to the young phenomenal harmonica player.

VOA Blogs

World Currencies

EUR
USD
0.8957
JPY
USD
120.93
GBP
USD
0.6393
CAD
USD
1.2199
INR
USD
63.470

Rates may not be current.