Greece bailout will prevent spillover: EU’s Barroso

By Chris Buckley

BEIJING (BestGrowthStock) – A multi-billion-euro aid package for Greece will be hammered out within days and will prevent the crisis from spilling over to other countries, European Commission President Jose Manuel Barroso said on Friday.

Debt restructuring was not on the cards in Greece and was not an option anywhere in the euro zone, he said.

“There is no doubt that Greece’s needs will be met in time,” Barroso told reporters in Beijing. “I am confident that the talks will be concluded very soon, meaning (the) next days.”

Barroso said he had discussed Greece’s troubles 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 or the euro, on the contrary,” he said.

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

International Monetary Fund, European Union 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, which he described as critical.

“It is about safeguarding the overall financial stability of the euro zone,” he said, adding it would “prevent further possible effects of contagion.”

German politicians have said the aid package could be worth 100-120 billion euros ($133-160 billion) 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 3-year pay freeze.

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

In the past, EU leaders have blamed an undervalued yuan as a source of global imbalances, fuelling China’s massive trade surplus with Europe. 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.

China had “clearly understood” the European Union’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.

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(Writing by Simon Rabinovitch; Editing by Paul Tait)

Greece bailout will prevent spillover: EU’s Barroso