Thaindian News

BRUSSELS (BNO NEWS) — The World Economic Forum on Europe on Monday opened with the participation of over 400 leaders from businesses, governments, academia, and civil societies from over 40 countries as an agreement on a $1 trillion rescue package from the European Union (EU) was announced.

Europe’s historic decision to provide an unprecedented rescue package to combat Europe’s sovereign debt crisis will “reinforce the Euro in the face of recent systemic challenges to the Eurozone and Europe,” said Olli Rehn, Commissioner of Economic and Monetary Affairs.

The “consolidation pact” is a commitment by EU Member States to take significant measures of fiscal consolidation to reduce debt and a European stabilization mechanism.“This will create a financial backstop for the current crisis and safeguard the economic recovery that is going on in Europe preconditions for sustainable economic growth,” the commissioner added.

Valdis Dombrovskis, Prime Minister of Latvia, a Young Global Leader, whose country is scheduled to join the Eurozone by 2014, reminded participants that many countries in the Eurozone did not play by the rules laid out in the Maastricht Treaty, whereby government deficits were to not to exceed 3% of GDP.

“The budget deficit criteria were fine. But most countries do not fulfill the Maastricht criteria. This problem must be addressed before the Eurozone will be a zone of currency stability,” he said.

The rescue package of 720 billion euros, referred to by some as the equivalent of a “shock and awe” campaign, stopped Europe’s spiraling debt crisis in its tracks and rebooted market confidence.

Stock markets plunged last week over rising concerns about debt contagion from Greece, but rallied this morning after the European Commission’s announcement. The package is expected to stop the crisis from spreading to other indebted countries – Portugal, Ireland, Italy and Spain, together with Greece.

The commissioner assured participants that closer monitoring of government finances and more rigorous enforcement of the deficit criteria will remain at the core of the internal surveillance mechanism of the euro area.

“There is a lack of political will in the UK to get the job done. Tough love is not something that sits well with the electorate. It is all about implementation, implementation, implementation.” Sorrell pointed to German Chancellor Angela Merkel’s party’s resounding defeat this past weekend in the North Rhine-Westphalia elections as a signal to those politicians who “espouse fundamental reform”.