Paul Taylor

BRUSSELS, Jan 30 (Reuters) – European leaders agreed
on a permanent rescue fund for the euro zone on Monday and 25
out of 27 EU states backed a German-inspired pact for stricter
budget discipline, but they struggled to reconcile fiscal
austerity with economic growth.

Only Britain and the Czech Republic refused to sign a fiscal
compact in March that will impose quasi-automatic sanctions on
countries that breach European Union budget deficit limits and
pledging to enact balanced budget rules in national law.

Officially, the half-day summit focused mainly on a strategy
to revive growth and create jobs at a time when governments
across Europe are having to cut public spending and raise taxes
to tackle mountains of debt.

But differences over the limits of austerity, and Greece’s
unfinished debt restructuring negotiations, hampered efforts to
send a more optimistic message that Europe is getting on top of
its debt crisis.

French President Nicolas Sarkozy told a news conference he
expected a final agreement on reducing Greece’s debt to private
bondholders “in the next few days” and believed that European
institutions – a clear reference to the European Central Bank -
would decide independently to help meet a funding gap.

(A general view shows the Swiss mountain resort of Davos December 28, 2011. REUTERS/Arnd Wiegmann)

Leaders of the Arab Spring sought to assure the world’s elite in Davos that the rise of political Islam is not a threat to democracy, and pleaded for help creating jobs and satisfying the hunger of their people for a better life. Politicians, activists and entrepreneurs from countries that have cast off dictators and held free elections in the last 12 months were prized guests at the World Economic Forum, where they asked for patience, understanding and investment.

The new prime ministers of Tunisia and Morocco, both chosen from Islamic parties, dismissed Western worries about a surge of political Islam across North Africa and sought to dispel the notion that the promise of last year’s protests had faded.

DAVOS, Switzerland (Reuters) – The European Central Bank’s new round of loans to banks have averted a major credit crunch but credit remains seriously impaired in parts of the euro area, ECB President Mario Draghi said at the World Economic Forum in Davos on Friday.

He also said the risk premium on euro zone government bonds was likely to remain high for an extended period, despite budget deficit cuts, economic reforms and moves to strengthen Europe’s fiscal discipline and financial firewalls.

Draghi said it was not yet clear whether the nearly 500 billion euros the ECB pumped into the banking sector in a cheap three-year liquidity operation was filtering through to companies and consumers.

DAVOS, Switzerland, Jan 27 (Reuters) – The European
Central Bank’s new round of loans to banks have averted a major
credit crunch but credit remains seriously impaired in parts of
the euro area, ECB President Mario Draghi said at the World
Economic Forum in Davos on Friday.

He also said the risk premium on euro zone government bonds
was likely to remain high for an extended period, despite budget
deficit cuts, economic reforms and moves to strengthen Europe’s
fiscal discipline and financial firewalls.

Draghi said it was not yet clear whether the nearly 500
billion euros the ECB pumped into the banking sector in a cheap
three-year liquidity operation was filtering through to
companies and consumers.

* Revolts swept aside leaders of Tunisia, Egypt, Libya,
Yemen

* Main issue for newly-empowered Islamic parties is jobs,
not religion

By Warren Strobel and Paul Taylor

DAVOS, Switzerland, Jan 27(Reuters) – Leaders of the
Arab Spring sought to assure the world’s elite in Davos that the
rise of political Islam is not a threat to democracy, and
pleaded for help creating jobs and satisfying the hunger of
their people for a better life.

Politicians, activists and entrepreneurs from countries that
have cast off dictators and held free elections in the last 12
months were prized guests at the World Economic Forum, where
they asked for patience, understanding and investment.

The new prime ministers of Tunisia and Morocco, both chosen
from Islamic parties, dismissed Western worries about a surge of
political Islam across North Africa and sought to dispel the
notion that the promise of last year’s protests had faded.

DAVOS, Switzerland, Jan 27 (Reuters) – Euro zone
finance officials voiced optimism on Friday that a deal to avert
a disorderly Greek defaut was imminent and that key building
blocks to resolve Europe’s sovereign debt crisis are gradually
fitting into place.

Europe’s top economic official said an agreement between the
Greek government and its private creditors on voluntary losses
for bondholders would be complete within days and the euro zone
was making progress on strengthening its financial firewalls.

“We are very close to a deal, if not today then over the
weekend and preferably in January, not February. We are very
close,” European Economic and Monetary Affairs Commissioner Olli
Rehn told the World Economic Forum in Davos.

DAVOS, Switzerland (Reuters) – The European Union’s top economic official said on Thursday that more public money will be needed to make up a shortfall in a second bailout for Greece if private bondholders agree to take a share of losses.

Economic and Monetary Affairs Commissioner Olli Rehn told Reuters that euro zone governments and EU institutions would need to make up the difference so that Greece’s public debt can be reduced to close to 120 percent of annual output by 2020.

Rehn said he expected Athens to reach agreement with private sector investors in the coming days on a debt swap under which they would take voluntary writedowns on Greek bonds.

DAVOS, Switzerland (Reuters) – The European Union’s top economic official said on Thursday that more public money will be needed to make up a shortfall in a second bailout for Greece if private bondholders agree to take a share of losses.

Economic and Monetary Affairs Commissioner Olli Rehn told Reuters that euro zone governments and EU institutions would need to make up the difference so that Greece’s public debt can be reduced to close to 120 percent of annual output by 2020.

Rehn said he expected Athens to reach agreement with private sector investors in the coming days on a debt swap under which they would take voluntary writedowns on Greek bonds.

DAVOS, Switzerland (Reuters) – The European Union’s top economic official said on Thursday that more public money will be needed to make up a shortfall in a second bailout for Greece if private bondholders agree to take a share of losses.

Economic and Monetary Affairs Commissioner Olli Rehn told Reuters that euro zone governments and EU institutions would need to make up the difference so that Greece’s public debt can be reduced to close to 120 percent of annual output by 2020.

Rehn said he expected Athens to reach agreement with private sector investors in the coming days on a debt swap under which they would take voluntary writedowns on Greek bonds.

DAVOS, Jan 25 (Reuters) – Financial markets’ sentiment
towards the euro zone may have turned the corner, but banks will
offer no more concessions in crucial talks to reduce Greece’s
private sector debt, BNP Paribas chairman Baudouin Prot said on
Wednesday.

He said the European Central Bank’s move to flood the
banking sector with almost half a trillion euros in short-term
loans had helped to change the mood.

“I am a cautious optimist,” Prot told Reuters at the World
Economic Forum in Davos.