German Chancellor Angela Merkel pushed for a stronger European political union on Thursday amid growing international calls for action as a brutal Spain ratings downgrade added another twist to the eurozone crisis.
US Federal Reserve Chairman Ben Bernanke became the latest to sound the alarm over the European crisis, as Merkel held talks in Berlin with British Prime Minister David Cameron.
The two leaders agreed that closer fiscal discipline in the EU alone was not enough to stem more than two years of turbulence as the clock ticks down for Europe to help stabilize Spain’s banking system.
Photo: AFP
The EU fiscal pact is “necessary, but not the only precondition,” Merkel said, while Cameron, who has opted out of the pact, called it “important, but not sufficient” to fight the crisis.
Merkel also said it was “important to stress that we have created instruments for support in the eurozone” and Germany, seen by some EU partners as being inflexible and reluctant to change, backed their use.
With EU leaders seeking an accord at another summit on June 28 and June 29, the crisis took -another twist on Thursday when Fitch slashed Spain’s credit rating by three notches from “A” to “BBB.”
Spain’s banks now needed “about 60 billion euros (US$75 billion) and as high as 100 billion euros in a more severe stress scenario,” Fitch Ratings said, more than double its previous estimate of restructuring costs.
Worse still, Fitch said Spain would likely remain in recession this year and next, rather than stage a mild recovery next year.
In Brussels, eurozone finance ministers head Jean-Claude Juncker said the bloc would recapitalize Spain’s banks if asked.
“If it came to it and Spain asked for support for its banking sector, that would obviously be done,” Juncker said, while stressing that “as there is no request, it is too early to spend time on figures” for any possible aid.
A ratings downgrade usually makes it more costly for a country to raise fresh funds, compounding problems for Spain, which is already being forced to pay more to borrow.
At a 10-year bond sale earlier on Thursday, Madrid had to offer investors returns of more than 6 percent — a rate widely regarded as unsustainable over the longer term — stoking fears it could follow Greece, Ireland and Portugal in needing a massive international bailout.
After Cameron and US President Barack Obama called for an “immediate plan” to resolve the eurozone crisis, Merkel earlier on Thursday told German television she saw “more Europe” as the solution.
The chancellor said that in addition to the euro currency used by 17 nations, Europe needed a fiscal union and, above all, a political union, even if that came at the cost of a two-speed approach.
“We need a political union first and foremost. That means we must, step by step, cede responsibilities to Europe,” Merkel told ARD public television. “But we must not remain immobile because one country or another does not want to follow yet.”
Juncker said the time had come to tell Europeans, “whether they like it or not,” that integration was inevitable and that leaders were “resolute” in anchoring their shared future in the euro — Greece included.
Meanwhile, Bernanke told US lawmakers that “the situation in Europe poses significant risks to the US financial system and economy and must be monitored closely.”
That followed telephone calls by Obama to Merkel and Italian Prime Minister Mario Monti on Wednesday, as Washington appears increasingly anxious the turmoil could escalate and threaten both the US recovery and Obama’s re-election hopes.
Two medieval fortresses face each other across the Narva River separating Estonia from Russia on Europe’s eastern edge. Once a symbol of cooperation, the “Friendship Bridge” connecting the two snow-covered banks has been reinforced with rows of razor wire and “dragon’s teeth” anti-tank obstacles on the Estonian side. “The name is kind of ironic,” regional border chief Eerik Purgel said. Some fear the border town of more than 50,0000 people — a mixture of Estonians, Russians and people left stateless after the fall of the Soviet Union — could be Russian President Vladimir Putin’s next target. On the Estonian side of the bridge,
Jeremiah Kithinji had never touched a computer before he finished high school. A decade later, he is teaching robotics, and even took a team of rural Kenyans to the World Robotics Olympiad in Singapore. In a classroom in Laikipia County — a sparsely populated grasslands region of northern Kenya known for its rhinos and cheetahs — pupils are busy snapping together wheels, motors and sensors to assemble a robot. Guiding them is Kithinji, 27, who runs a string of robotics clubs in the area that have taken some of his pupils far beyond the rural landscapes outside. In November, he took a team
Civil society leaders and members of a left-wing coalition yesterday filed impeachment complaints against Philippine Vice President Sara Duterte, restarting a process sidelined by the Supreme Court last year. Both cases accuse Duterte of misusing public funds during her term as education secretary, while one revives allegations that she threatened to assassinate former ally Philippine President Ferdinand Marcos Jr. The filings come on the same day that a committee in the House of Representatives was to begin hearings into impeachment complaints against Marcos, accused of corruption tied to a spiraling scandal over bogus flood control projects. Under the constitution, an impeachment by the
Exiled Tibetans began a unique global election yesterday for a government representing a homeland many have never seen, as part of a democratic exercise voters say carries great weight. From red-robed Buddhist monks in the snowy Himalayas, to political exiles in megacities across South Asia, to refugees in Australia, Europe and North America, voting takes place in 27 countries — but not China. “Elections ... show that the struggle for Tibet’s freedom and independence continues from generation to generation,” said candidate Gyaltsen Chokye, 33, who is based in the Indian hill-town of Dharamsala, headquarters of the government-in-exile, the Central Tibetan Administration (CTA). It
RSS