Eurocrisis in “The Australian”

The Australian

From correspondents in London
From: AFP
December 19, 2011 1:25PM

EUROPEAN Union ministers will reportedly ask Britain to contribute
30.9 billion euros ($40.5 billion) towards an International Monetary
Fund (IMF) package aimed at rescuing the single currency.

Britain would be asked for the cash injection when European finance
ministers hold talks over the 200-billion-euro fund tonight, an EU
official told Britain’s Daily Telegraph.

If Britain agrees, it would be the second biggest contributor to the
package behind Germany and level with France.

However, British Prime Minister David Cameron, who blocked plans for
EU treaty changes aimed at saving the currency, has repeatedly
promised not to directly fund a bailout kitty.

Britain is already liable for 14.3 billion euros of loans and
guarantees to Greece, Ireland and Portugal.

With several members of the 17-strong eurozone, of which Britain is
not a part, under threat of credit rating downgrades, the key focus of
tonight’s telephone conference will be boosting coffers to enable the
new fund to come to the aid of floundering economies.

A government source said the Eurogroup ministers would “discuss what
happens after the European summit of December 8 and 9” on saving the

At that summit, member countries announced plans to pump 200 billion
euros into the war chest.

Eurozone members were to provide about three quarters, and other EU
countries the rest. The aim was to allow the Washington-based IMF to
come to the aid of eurozone countries in trouble, and the summit gave
leaders 10 days to work out the details.

The eurosceptic wing of Mr Cameron’s Conservative Party is urging
their leader to resist attempts to make Britain pay towards any
bailout of heavily-indebted eurozone nations.

“We did not agree any increase in bilateral resources last week,” a
spokesman for the PM said on Friday. “We made very clear in that
meeting that we were not contributing to that 200 billion euros.”

• EUROPEAN Central Bank chief Mario Draghi says he is saddened by the
increasingly bitter spat between Britain and the rest of the European
Union over London’s refusal to join a fiscal package to solve the
bloc’s debt crisis.

“Britain certainly has shown a capacity to undertake a fiscal
correction of an extraordinary size. My more general reaction to all
this is that it’s sad. I think the UK needs Europe and Europe needs
the UK,” Mr Draghi said in an interview for the Financial Times.

Mr Draghi told the London-based broadsheet that recovery depended upon
rebuilding the trust of European investors and citizens, and that a
strong ECB was central to that plan.

A row erupted last week after Britain clashed with France at a
dramatic summit over Mr Cameron’s refusal to join members of the
eurozone currency bloc in the new fiscal pact.

That prompted French President Nicolas Sarkozy to declare there were
now “two Europes”.

France was also angered by a warning from US credit ratings agency
Standard and Poor’s that it could strip France of its triple-A rating
as a result of the crisis.

In response, Christian Noyer, the governor of the French central bank,
suggested on Thursday that the ratings agencies should consider
downgrading Britain instead, before French Prime Minister Francois
Fillon added to the criticism of the British economy.

Britain hit back on Friday as deputy premier Nick Clegg told Fillon to
“calm the rhetoric” and that the comments were “simply unacceptable”.