G20: Monti denies EFSF rescue is “bailout”
20 June 2012
The Daily Telegraph, The Guardian, Corriere della Sera
Rumours have been rife for weeks, but it’s the British Daily Telegraph, at the close of the G20 summit in Mexico, that has smashed the taboo, revealing that Spain and Italy are on the verge of bailout. But is Mario Monti’s plan to use EFSF money to buy up debt really a bailout?
“Spain and Italy to be bailed out,” leads the Daily Telegraph, after it emerged that European leaders are poised to announce a €750 billion rescue deal for the two southern European economies most at danger in the ongoing eurozone crisis.
All week at the G20 summit in Los Cabos, Mexico, German Chancellor Angela Merkel and other EU leaders have been subject to “intense pressure” to come up with a solution to the ever rampant euro crisis as rates on Spanish bonds leaped to unsustainable levels, the London daily writes. In a deal which represents a substantial policy shift for Chancellor Merkel –
... two European rescue funds – the €500 billion European Stability Mechanism (ESM) and the €250 billion European Financial Stability Facility (EFSF) – will buy bonds issued by European countries.
The Guardian, which leads with the same story, adds that G20 officials believe an official announcement could be made by eurozone leaders in the next few days, adding that –
Analysts are likely to see the decision as the first step towards sharing the burden of troubled countries' debts across the single currency's 17 members, though it falls short of the collective loans or "eurobonds" proposed by the European commission president, José Manuel Barroso.
In Italy, Turin’s La Stampa also leads with a “Rescue plan for Italy and Spain”, but adds that Mario Monti, reacting to the Telegraph headline, immediately argued that – “This news is wrong, for Italy bailout is not an option.”
For the Italian PM, his proposal to use EFSF money to buy up the bonds of European countries whose interest rates are spiralling out of control, is not a bailout as the British press understands it. This “dyke against speculation”, as he coins it, has been endorsed by French president François Hollande and Spanish PM Mariano Rajoy, and is to be discussed this Friday when the three meet in Rome with German chancellor Angela Merkel. Concerning the proposal, Milan daily Corriere della Sera notes –
... it is significant that the German Chancellor Angela Merkel has not issued any statement on the matter. Meanwhile, in its final summit statement, we read that the G20 leaders are in favour of Europe’s desire for further integration of the banking system.