Paul Taylor

PARIS, Jul (Reuters) – Angela Merkel will deny it, but Thursday’s euro zone deal to rescue Greece again from the brink of bankruptcy puts Europe on the bumpy road to a fiscal union.

By giving their bailout fund new scope to help countries before they are shut out of credit markets, recapitalize banks and buy bonds in the secondary market, leaders of the 17-nation currency area laid the foundations of a European Monetary Fund.

They also made clear this was not the final stage in fiscal integration, with French President Nicolas Sarkozy promising new Franco-German proposals on economic governance by September.

“The EU summit was a historic victory for the French vision of EMU (Economic and Monetary Union)– meaning that it is now on course to turn into a fiscal/transfer union,” said analyst Brendan Bowen of Mitsubishi UFJ Securities International.

The German Chancellor accepted a leap forward which she had blocked in March, when a promised “comprehensive package” to solve the euro zone’s sovereign debt crisis was reduced to half-measures that failed to stop contagion spreading.

PARIS, Jul (Reuters) – Angela Merkel will deny it, but Thursday’s euro zone deal to rescue Greece again from the brink of bankruptcy puts Europe on the bumpy road to a fiscal union.

By giving their bailout fund new scope to help countries before they are shut out of credit markets, recapitalize banks and buy bonds in the secondary market, leaders of the 17-nation currency area laid the foundations of a European Monetary Fund.

They also made clear this was not the final stage in fiscal integration, with French President Nicolas Sarkozy promising new Franco-German proposals on economic governance by September.

BRUSSELS/PARIS, July 18 (Reuters) – European government
officials and commercial bankers struggled to reconcile
competing proposals for a second bailout of Greece on Monday,
just three days before a summit meeting called to prevent the
crisis from spreading through the region.

French government spokeswoman Valerie Pecresse said she
believed the summit of the euro zone’s 17 national leaders
scheduled for Thursday in Brussels would agree on a rescue of
Greece, supplementing a 110 billion euro ($154 billion) bailout
launched in May last year.

But after three weeks of preparatory talks, it was unclear
how a consensus could be reached on a way for private owners of
Greek government bonds — banks, insurers and other investors –
to contribute to the bailout by taking cuts in the face value of
their holdings.

ATHENS (Reuters) – The Greek Orthodox Church owns more land than anyone except the state, employs thousands on the public payroll, has a stake in the nation’s biggest bank, but campaigners say its tax payments are derisory.

The Church vehemently denies accusations it is one of Greece’s biggest tax dodgers and says it is playing a vital social, economic and spiritual role in this time of hardship..

With the third year of recession tormenting Greece’s 11 million people, the Church has provided solace, comfort and nourishment but activists say it’s now time to dig deep into its coffers to help with the bailout.

(Greek orthodox priests hold a Greek flag in a protest in front of the parliament house during a rally in Athens, February 6, 2011/John Kolesidis )

The Greek Orthodox Church owns more land than anyone except the state, employs thousands on the public payroll, has a stake in the nation’s biggest bank, but campaigners say its tax payments are derisory. The Church vehemently denies accusations it is one of Greece’s biggest tax dodgers and says it is playing a vital social, economic and spiritual role in this time of hardship.

With the third year of recession tormenting Greece’s 11 million people, the Church has provided solace, comfort and nourishment but activists say it’s now time to dig deep into its coffers to help with the bailout.

ATHENS (Reuters) – The Greek Orthodox Church owns more land than anyone except the state, employs thousands on the public payroll, has a stake in the nation’s biggest bank, but campaigners say its tax payments are derisory.

The Church vehemently denies accusations it is one of Greece’s biggest tax dodgers and says it is playing a vital social, economic and spiritual role in this time of hardship.

With the third year of recession tormenting Greece’s 11 million people, the Church has provided solace, comfort and nourishment but activists say it’s now time to dig deep into its coffers to help with the bailout.

ATHENS (Reuters) – The euro zone’s debt crisis has taken a dangerous turn. Contagion is singeing the currency bloc’s third biggest economy Italy, which would be too big to save with existing EU financial fire-fighting tools.

The cheapest way for Europe to build a firewall to shield Italy would be to take decisive action this month on a second bailout for Greece, market participants and EU officials say.

The longer a decision is delayed, the greater the risk of events getting out of hand in Greece or on capital markets, forcing core nations to take more radical and politically difficult measures to hold the 17-nation currency zone together.

ATHENS (Reuters) – The euro zone’s debt crisis has taken a dangerous turn. Contagion is singeing the currency bloc’s third biggest economy Italy, which would be too big to save with existing EU financial fire-fighting tools.

The cheapest way for Europe to build a firewall to shield Italy would be to take decisive action this month on a second bailout for Greece, market participants and EU officials say.

The longer a decision is delayed, the greater the risk of events getting out of hand in Greece or on capital markets, forcing core nations to take more radical and politically difficult measures to hold the 17-nation currency zone together.

POROS, Greece (Reuters) – Seen from Greece, there is something faintly surreal about watching European authorities and banks trying and failing to work out how to involve private sector bondholders in another rescue of Athens.

The damage this wrangling is causing to the euro zone’s credibility appears out of all proportion to the money it might raise towards funding the bloc’s most distressed debtor.

Just when Greece hoped for breathing space after adopting a new five-year austerity plan despite fierce street protests, acrimonious talks on making private bondholders pay have wrecked any honeymoon.

POROS, Greece (Reuters) – Seen from Greece, there is something faintly surreal about watching European authorities and banks trying and failing to work out how to involve private sector bondholders in another rescue of Athens.

The damage this wrangling is causing to the euro zone’s credibility appears out of all proportion to the money it might raise towards funding the bloc’s most distressed debtor.

Just when Greece hoped for breathing space after adopting a new five-year austerity plan despite fierce street protests, acrimonious talks on making private bondholders pay have wrecked any honeymoon.