Rehn: Debt crisis damaging Europe on world stage
by Daniel Mason
Europe's global status is "weakening ominously" as a result of the crisis that has engulfed the continent and the single currency, European Commission vice-president Olli Rehn has said. According to the Wall Street Journal, Rehn told a meeting of Finnish ambassadors yesterday that Europe had "constantly been on the receiving end because of the debt crisis" in meetings of organisations such as the G20 and International Monetary Fund.
"At this rate, Europe's status in the global economy is weakening ominously," the commissioner responsible for economic and monetary affairs and the euro is reported to have said. He added that confidence could only be regained if European Union leaders were united. "European decision-making should be a confidence building-team sport, otherwise it will not accomplish anything, nor will it bear fruit."
International investors and politicians see the eurozone as "unfinished business" and so "strengthening the euro area is the logical way forward", he said. His comments came amid a series of meetings between eurozone leaders to discuss the crisis in Greece, which remains the focus of attention.
Following talks with Greek Prime Minister Antonis Samaras in Athens yesterday, Eurogroup chief Jean-Claude Juncker said that Greece had a "last chance" to meet the conditions of its multi-billion euro bail-outs. He praised the "tremendous efforts" made so far and said he was "totally opposed" to Greece leaving the euro. Earlier Samaras, in an interview with the German daily Bild had called for more "breathing space" as the country battles a fifth year of recession. The economy shrank 6.2 per cent year-on year in the second quarter of 2012.
The prime minister is due to meet French President Francois Hollande and German Chancellor Angela Merkel later this week in an attempt to negotiate an extension to Greece's deadline for implementing austerity measures. The Greek government has to identify savings of €11.5bn on top of the tough spending cuts and tax rises that have already been put in place. Today Hollande and Merkel are set to hold talks in Berlin ahead of their separate meetings with Samaras on Friday and Saturday respectively.
Yet, eurozone leaders have insisted that no further decisions will be taken on Greece until the publication in September of a report by the commission, European Central Bank and IMF, which will determine whether the next installment of rescue loans will be released. Nevertheless German finance minister Wolfgang SchaŘble today suggested that Greece's chances of being allowed an extra two years to fulfil the bail-out terms were slim. "More time is not a solution to the problems," he told Germany's SWR radio.
He was echoing Dutch finance minister Jan Kees de Jager, who told reporters yesterday that "delaying reforms and budget cuts" was "not a good idea". Meanwhile Rehn's comments yesterday emphasised the potential long-term damage of the ongoing crisis on Europe's place in the global political and economic landscape.