WORLD
EU still looking for way forward on Greece, growth, and euro zone
Baku, May 24 (AZERTAC). The latest summit in Brussels concluded with wide agreement that something needs to be done but with little consensus on what to do.
European Union leaders concluded their latest summit with few concrete steps to fix the continent's festering financial crisis even as the potential for a messy Greek exit from the euro appears to be rising. Some leaders stressed the importance of planning for just such an event but offered no concessions for Greece's stringent bailout terms.
The perception that European leaders lack the political will to tackle the continent's financial and economic problems has left markets on edge for weeks. Recession is spreading and government borrowing costs are on the rise across much of Europe, making it harder for heavily indebted countries to finance their deficits. The biggest fear is that if Greece cannot be saved, other larger economies — like Spain or Portugal — might face the same fate.
The eurozone countries "have to consider all kinds of events," Luxembourg Prime Minister Jean-Claude Juncker told reporters after a European Union summit, but insisted that "the working assumption" was that Greece would remain part of the euro. Leaders gathered in Brussels recognized that Greece had endured significant hardships and promised to release development funds aimed at spurring growth.
But the statement from Juncker, who also chairs meetings of eurozone finance ministers, was a frank admission that Greece could wind up abandoning the euro — especially after fringe political parties that are threatening to renege on commitments made to secure bailout loans saw their popularity surge in recent elections. No party has been able to form a government, and the country will vote again June 17.
Many analysts fear a Greek exit would cause investors to doubt the financial viability of other weak members that use the currency and create global financial panic. Others have said that Greece, already in its fifth year of recession, has no hope of recovery if it sticks to the spending cuts and tax hikes it agreed to in order to secure bailout loans.
"We want Greece to remain in the euro area," German Chancellor Angela Merkel said after the meeting. "We expect that they will stick to the commitments that they have entered into."
One of the biggest questions facing Europe is whether it's time to cut Greece some slack. Some European countries seemed ready to ease the pressure, and international organizations have called for the pace of austerity measures to be slowed in some struggling countries.
But the Thursday's summit of 27 European Union leaders ended with no apparent concessions. A final statement said Greece had to respect its commitments and trumpeted the money the Eurozone and the International Monetary Fund had loaned Greece as a sign of their "solidarity." It did say that funds for economic development would be sent to Greece — though it's unclear how much of an immediate impact on growth they would have.
Greece is now in its fifth year of recession, and many argue the country cannot hope for a recovery if it sticks to the bailout deal. The minor parties that fared well in recent elections have said the country needs a break, and even some international organizations have begun to call for easing austerity measures in some struggling countries.