EC president: Greece bailout will stop spillover

 Barroso says China remains confident in the euro

BEIJING: A multi-billion-euro aid package for Greece will be hammered out within days and the bailout will prevent the crisis from spilling over to other countries, European Commission president Jose Manuel Barroso said yesterday.

Speaking to reporters in Beijing, Barroso said he had discussed Greece’s troubles in meetings with Chinese Premier Wen Jiabao and that China remained confident in the euro even as sovereign debt worries ripple across Europe.

“I don’t think that China is lacking confidence in the European Union (EU) or the euro, on the contrary,” he said.

He also said Chinese leaders “never mentioned” any possible aid for Athens. Reports that Greece would sell bonds to China spurred market optimism earlier this year, but the Greek government subsequently denied there was any deal in place.

 

Visitors look at an art work featuring a projection of a Chinese renminbi note with a talking Mao Zedong at a gallery in Beijing. The Chinese currency has steadily appreciated against the euro since the end of last year.— AP

 

International Monetary Fund (IMF), European Union (EU) and European Central Bank officials are in Athens to negotiate the bailout and hope to wrap up a deal within days in an effort to avoid a debt default in Greece that could sink other fragile EU countries.

Barroso said they were “making solid, rapid progress” in drawing up the rescue package, reiterating that debt restructuring was not on option for Greece.

He also said the aid deal “will prevent further possible effects” of the crisis from spreading within the EU.
German politicians have said the aid package could be worth 100 billion-120 billion euros over three years, against an original plan for 45 billion euros of aid in 2010.

Greece has readied severe austerity measures demanded as a condition for the aid, providing relief to financial markets but drawing threats from unions of a mighty battle to come.

Union officials said the IMF asked Athens to raise sales taxes, scrap bonuses amounting to two extra months pay in the public sector, and accept a three-year pay freeze.

Greece’s debt woes served as a reminder of the need to address economic imbalances both inside and beyond Europe, Barroso said.

In the past, EU leaders have pointed their fingers at an undervalued yuan as a source of global imbalances, fuelling China’s massive trade surplus with Europe. But Barroso had a softer tone in public, at least after his latest round of meetings in Beijing.

“We are not putting pressure on anybody,” he said.

He added that it was natural that “the main global players discuss these issues of global imbalances, because we need to have a common approach, we need to restore growth globally.”

China had “clearly understood” EU’s message on currencies, Barroso said.

Beijing has effectively pegged the yuan at about 6.83 to the dollar since mid-2008, trying to cushion its exporters from the global economic downturn.

Tracking the dollar’s movements, the Chinese currency has steadily appreciated against the euro since the end of last year. — Reuters