Fekter sceptical about letting banks sneak away

Austrian People’s Party (ÖVP) Finance Minister Maria Fekter has emphasised that private companies should get on board to rescue Greece.

The cash-strapped Eurozone and European Union (EU) member state is seen on the brink of bankruptcy by a growing number of financial market experts. Many commentators fear the southern country will be unable to pay back all subsidies it has received by the EU and the International Monetary Fund (IMF) in the past months regardless of the time limit and the interest rate.

Some political leaders are in favour of forcing banks and insurance companies engaged in Greece to do their bit in getting the state finances of the ailing nation in order. EU leaders are at odds over whether these institutes should be ordered to do so. Some federal government leaders and finance ministers suggest asking the banks and insurers to help without making such an engagement mandatory would be the best option.

Fekter refused to reveal whether she was in favour of making a participation of banks an obligatory issue. After meeting with her colleagues from the EU’s other 26 members yesterday evening, she described such engagements as “essential.” Fekter said she was “sceptical” when being asked whether the idea of involving banks and insurance firms in the rescue bid for Greece could be dropped again.

“Several options are now on the table. We have to discuss them. Avoiding a Greek state bankruptcy has to be our chief priority,” the ex-interior minister announced.

Fekter said: “May we manage to find a creative model. All possibilities have to be checked for their practicability.”

Fekter warned on Monday that the “crisis is not over yet. We are still busy carrying out stabilising measures.”

The minister appealed to the EU to avoid a zigzag course to stop the international financial markets from getting more unsettled about the financial condition of Greece and Italy than they were already. Analysts fear that Italy – Europe’s third-biggest economy – could soon seek financial assistance too due to its sky-high debts. The country’s right-wing government is expected to agree upon an austerity package shortly.

Greece was the first EU member to receive subsidies from the EU and the IMF last year. The decision-making of the country’s government tempted hundreds of thousands to take to the streets in Athens and other cities over the past few months. They expressed their disagreement with looming pay and pension cuts and higher taxes. Peaceful demonstrations have been overshadowed by violent encounters of some protesters with riot police.

Ireland and Portugal also asked the EU and the IMF for help in getting back in the black. The Irish gross domestic product (GDP) and debt rate has been burdened by the near collapse of some of the country’s biggest banks. The institutes were bolstered with billions of Euros sourced from state funds to avoid their demise. Portugal has been experiencing difficulties for years due to its weak economy. The country’s government had denied the need for help for months before it eventually cleared the air in April.

Reports have it that Herman Van Rompuy, the head of the European Council, could call in a special summit of the heads of the governments of the EU’s member countries as early as this weekend to debate the Greek issue and the condition of Italy.

Meanwhile, a vast majority of Austrians were found to be convinced that their country would be using the Euro as its currency in five years. Researcher Karmasin said 85 per cent of interviewed citizens had this opinion. The agency added that just eight per cent thought that the Schilling – replaced by the Euro in 2002 – would be reintroduced by 2016.

An increasing number of Austrians are allegedly developing a critical attitude towards the Euro, the EU and its activities to the benefit of debt-stricken members.

Eurostat, the European Commission’s (EC) public research agency, found in April 2009 that 50 per cent of Austrians rejected claims that the domestic economy would be better protected from throwbacks by the Schilling than the Euro. Thirty-eight per cent of questioned Austrians said they rated the Schilling’s capabilities to shield the economy higher.

Only in May, Karmasin found that more than six in 10 Austrians (63 per cent) wanted the country to remain a member of the Eurozone which currently consists of 17 EU states. Thirty-one Austrians told the research company they were in favour of a comeback of the Schilling. Asked for their opinion considering the current Greek drama, just 12 per cent told Karmasin one month later that they were certain the country would be in the position to repay all credits provided by other EU members.