Eurozone finance ministers have freed a first tranche of loans for Cyprus, met Italy's new government, and urged Slovenia to act in haste to avoid the need for emergency loans in an ongoing two-day meeting in Brussels.
Cyprus was granted its first tranche of European Union emergency loans, the first installment of its "bailout," on Monday as finance ministers from the countries using the euro currency convened for wide-ranging talks in Brussels.
The EU's permanent rescue fund, the European Stability Mechanism (ESM), said in a statement on Monday that the first 2-billion-euro ($2.6-billion) tranche for the small eurozone member was "transferred today," with a second release of "up to one billion to be transferred before 30 June 2013." In total, Cyprus is set to receive 10 billion euros in international loans.
Italian Finance Minister Fabrizio Saccomanni attended his first Brussels summit with his new counterparts, briefing them on his coalition government's plans to continue with the economic and financial reforms begun by caretaker Prime Minister Mario Monti before him.
"We called on the new government to maintain the pace of fiscal consolidation," Jeroen Djisselbloem of the Netherlands, who chairs the eurozone finance ministers' meetings, said. "We were reassured to learn that the government intended to pursue an ambitious structural reform agenda aimed at raising Italy's growth potential and addressing the country's imbalances.
Greece's next tranche of loans was also cleared at Monday's meeting, while Portugal's next installment was verbally cleared by Djisselbloem after Sunday's fresh deal on cuts in parliament in Lisbon. Portugal's case had become problematic since the constitutional court deemed that some reforms demanded by international creditors in return for the loans were not compatible with Portugal's constitution, forcing the government to seek alternative measures.
Ministers continued to play the waiting game with Slovenia, which has implemented a raft of austerity measures seeking to stave off international loans before calling on them. EU Economic and Euro Commissioner Olli Rehn said it was "too early to say" whether these programs would stop Slovenia from seeking assistance.
Bigger pills still to swallow
Non-eurozone finance ministers join the meeting in Brussels on Tuesday, with broader issues liable to cause far more tension. The wider assembly of ministers will seek to plot Europe's path to unified banking supervision and improved methods of combating tax evasion.
German Finance Minister Wolfgang Schäuble stoked the debate on banking oversight ahead of time with an opinion article published in the "Financial Times" newspaper. Positing that bloc-wide banking supervision would require changes to EU treaties, a lengthy procedure if it even proves possible, Schäuble suggested a "two-step approach."
He recommended that once the supervisory body were ready, it could start work without EU-wide funding; he said this model could "lean on national funds, which already exist in several member states."
Schäuble's ideas floated in print met a comparatively frosty reception, with Djisselbloem saying the legal treaty concerns were already far down the road.
"We must take many steps - and that has to happen very quickly - before we reach the legal issue that the Germans are worried about," Djisselbloem said. Luxembourg's Luc Frieden said the idea of using national funds was not acceptable, while France's Pierre Moscovici said, "we need to go as far as possible in the framework of the existing treaties and then envisage what could require treaty modification."
msh/jm (AFP, AP, dpa)