Merkel: Europe Faces “long Road” To
Win Back Trust.
by Geir
Moulson(AP and OfficialWire)BERLIN (GERMANY)
Germany Europe Financial Crisis
German
Chancellor Angela Merkel said Standard and Poor's downgrades of nine
countries underline the fact that the eurozone faces a "long
road" to win back investors' confidence, pushing Saturday for it to
move quickly on a new budget discipline pact and a permanent rescue fund.
Germany kept
its AAA rating but S&P stripped France, with which it has co-piloted
the eurozone rescue drive, of its top-notch rating — fueling concerns
that that in turn could complicate Europe's efforts to keep its weaker
economies afloat.
Merkel said
that she had "taken note" of the decision by S&P, which she
stressed repeatedly is only one of three major rating agencies.
"The
decision confirms my conviction that we in Europe still have a long road
ahead of us before the confidence of investors is restored," she said
at a televised news conference in the north German city of Kiel, where her
conservative party's leadership was meeting.
"But I
think it can be seen that we have set off with determination along this
road (to) a stable currency, solid finances and sustainable growth,"
she added.
Merkel
stressed the importance of a new treaty enshrining tougher fiscal rules,
for which Germany has pushed hard.
Most
European Union leaders agreed in early December to draw up the pact, and
Merkel has said the pact could be signed as early as the end of this
month, and at the beginning of March at the latest.
"We are
now called upon ... to implement quickly the fiscal pact and implement it
decisively — without trying to water it down everywhere," Merkel
said.
The
chancellor sought to allay concerns that the downgrade of France, the
17-nation eurozone's No. 2 economy after Germany, would complicate the
work of the bloc's temporary rescue fund, the euro440 billion ($560
billion) European Financial Stability Facility.
However, she
did underline the urgency of putting its permanent successor, the European
Stability Mechanism, in place quickly. European leaders already have
decided to get it up up and running in July, a year ahead of the original
schedule; Merkel and French President Nicolas Sarkozy said on Monday that
they would consider speeding up payments into the ESM.
The
downgrades "won't torpedo the work of the EFSF now — I see no need
to change anything about the EFSF now," she said. "I am firmly
convinced that the EFSF can fulfill the needs it still has to fulfill in
the coming months with the existing methods."
She added
that "we will work to implement as quickly as possible the ESM —
that is also important for investors' confidence."
The ESM will
be able to lend euro500 billion. In contrast to the EFSF, it will have
paid-in capital from euro countries, similar to a bank, which makes it
less vulnerable to downgrades of its contributing states..
Merkel said
Europe needs the new fund, "which is underlaid by capital and will be
independent from such (ratings) evaluations."
As for the
current temporary fund, she suggested that its top rating isn't so
important — "from the beginning, I wasn't of the opinion that the
EFSF absolutely has to be triple-A."
"Of
course it isn't easier to borrow money on the capital market if you have a
somewhat worse rating, but as the French finance minister said yesterday,
AA+ really isn't a bad rating," Merkel added.
She said she didn't expect Friday's S&P decision to lead to "Germany having to do more in comparison with others."
