EU reaches deal, hoping for Chinese investments
After a late-hour marathon, the Eurogroup comes up with a three-pronged strategy to solve debt crisis: recapitalisation of banks, accepting losses on Greek debt and boosting stability fund. However, it will need Chinese money to do it. Beijing might oblige but on certain conditions.
Beijing (AsiaNews) – After marathon talks that lasted seven hours. European Union leaders meeting in Brussels agreed to a plan to solve the debt crisis that has hit the Old Continent. The European Council also gave thumbs up to a letter of intent by the Italian government, detailing how it will solve domestic problems. Now Europe wants a partner to tackle the financial cost of the operation, and is turning towards China. Beijing is willing to invest but on certain conditions.
According to the deal signed yesterday, Eurogroup leaders agreed to a three-pronged approach. Private banks holding Greek debt will accept a loss of 50 per cent. They must also raise more capital. And the European Financial Stability Facility (EFSF) will be boosted to 1 trillion Euros. The framework for the new fund is to be put in place in November.
European leaders praised the agreement. “The summit allowed us to adopt the components of a global response, of an ambitious response, of a credible response to the crisis that is sweeping across the euro zone,” French President Nicolas Sarkozy said.
For her part, German Chancellor Angela Merkel added, "I think we were able to meet expectations and we have done what needed doing" for the euro.
“The package that we have agreed tonight [. . .] confirms that Europe will do what it takes to safeguard financial stability,” said European Commission President Jose Manuel Barroso. “I've said it before and I'll say it again, this is a marathon not a sprint."
These statements have appeased world markets, which have positively reacted to the agreement. However, European leaders know that they must find investors with big pockets to consolidate the EFSF, whose chief executive officer, Klaus Regling, is travelling to Beijing to court potential patrons.
Anonymous diplomatic sources in Brussels said that China is willing to help Europe but there is nothing concrete or detailed about its role in the fund. China said is satisfied by the agreement and is willing to help but did not provide any detail.
China's official Xinhua news agency said the outcome of the EU summit was "positive but filled with difficulties;” however, “it shows the systemic and structural problems the EU has,” and this is not good for investors.
"I think you can see China participating possibly country by country because it's easier for them get concessions on investments and imports and trades and other things at the sovereign level than from the EU," said Paul Sheehan, chief executive of Hong Kong-based hedge fund Thaddeus Capital. This is why it is doubtful whether they will change that.
According to the deal signed yesterday, Eurogroup leaders agreed to a three-pronged approach. Private banks holding Greek debt will accept a loss of 50 per cent. They must also raise more capital. And the European Financial Stability Facility (EFSF) will be boosted to 1 trillion Euros. The framework for the new fund is to be put in place in November.
European leaders praised the agreement. “The summit allowed us to adopt the components of a global response, of an ambitious response, of a credible response to the crisis that is sweeping across the euro zone,” French President Nicolas Sarkozy said.
For her part, German Chancellor Angela Merkel added, "I think we were able to meet expectations and we have done what needed doing" for the euro.
“The package that we have agreed tonight [. . .] confirms that Europe will do what it takes to safeguard financial stability,” said European Commission President Jose Manuel Barroso. “I've said it before and I'll say it again, this is a marathon not a sprint."
These statements have appeased world markets, which have positively reacted to the agreement. However, European leaders know that they must find investors with big pockets to consolidate the EFSF, whose chief executive officer, Klaus Regling, is travelling to Beijing to court potential patrons.
Anonymous diplomatic sources in Brussels said that China is willing to help Europe but there is nothing concrete or detailed about its role in the fund. China said is satisfied by the agreement and is willing to help but did not provide any detail.
China's official Xinhua news agency said the outcome of the EU summit was "positive but filled with difficulties;” however, “it shows the systemic and structural problems the EU has,” and this is not good for investors.
"I think you can see China participating possibly country by country because it's easier for them get concessions on investments and imports and trades and other things at the sovereign level than from the EU," said Paul Sheehan, chief executive of Hong Kong-based hedge fund Thaddeus Capital. This is why it is doubtful whether they will change that.
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