Finance ministers from euro zone countries gathered in Brussels for a meeting to discuss rescue measures decided at the June European Union (EU) summit meeting, and pessimistic markets drove the euro down to a two-year low in anticipation of the talks.
Bloomberg reported Monday that finance ministers planned to discuss crisis-fighting measures that were agreed on by government heads at the June meeting. Among those measures was a relaxation of conditions on emergency loans for Spanish banks.
Reuters reported that the country was to be given an extra year to bring its deficit in line with the target of 3% of GDP, with the concession being announced by three EU diplomats ahead of an official decision on Tuesday. One of the unnamed diplomats was quoted saying,
"Spain's budget consolidation targets will be adjusted to give it an extra year. This is not a unilateral move. Spain needs to make the necessary cuts to reach that goal and this will be discussed on Tuesday at the Ecofin [meeting of ministers]. I expect the extra year to be granted."
Other measures to be discussed include granting the European Central Bank (ECB) more oversight of the euro zone's banks and use of the euro zone's rescue funds to reduce countries' borrowing costs. However, few details have been decided and differences among countries could end up taking months to resolve.
A diplomat familiar with the agenda was quoted saying, "This is very much the follow on from the summit, but it doesn't mean all details can be set down. The issue of ECB supervision is a complex, longer-term issue and not one that can be decided in a few hours."
Not just control over rescue funds and banks is at issue. Also to be discussed is Greece’s insistence on relaxing the terms of its bailout—an insistence that gained credibility over the weekend with the win by Antonis Samaras of a confidence vote in his government.
Before the vote, Samaras was quoted saying, “The only path to avoid the crisis and an exit from the euro is growth and investment. Europe acknowledges that along with fiscal adjustment there must be growth.”
Although the issue is not expected by Greek leaders to be settled at this conference or even the next, because of opposition to any relaxation of terms by countries like Finland, Germany and the Netherlands, Greece is determined to pursue it and still stay within the euro.
Democratic Left leader Fotis Kouvelis was quoted saying, “Some of those issues can be pursued now at the negotiating table, some at a second stage. Negotiations won’t occur at one point in time, at one summit, or at the first visit of the troika. It will be a continuous and persistent process, with tough talks.”
Samaras had said Friday, referring to the tough austerity measures imposed as terms of the bailout, “We don’t want to change the goals; we want to change those things that are obstacles to our goals. The recession has to end, not constantly be reinforced.”