BRUSSELS, May 10 -- Policymakers and business leaders on Monday started a two-day brainstorming on the European economic future after European Union (EU) finance ministers hammered out a massive rescue mechanism to contain the Greek debt crisis.
"Some of our members have been living beyond their means. This is not sustainable," European Commission President Jose Manuel Barroso told a panel at the opening plenary session of the World Economic Forum (WEF) on Europe, which opened Monday and brought over 400 leaders of business, government, academia and civil society from more than 40 countries.
The Greek debt crisis raised serious questions over the growth mode in certain EU countries, where years of overspending and lack of structural reforms have left hidden troubles for the future.
In the case of Greece, it has run high budgetary deficits well beyond EU limits in the past years, resulting in grave debt troubles in the wake of the global economic crisis.
The EU rules require that member states keep their budgetary deficit below 3 percent of gross domestic product (GDP). But Greece had a deficit of 13.6 percent last year.
The debt troubles have even intensified in Greece in recent months, partly due to confused and slow response from the EU and speculative attacks in the markets.
The fiscal problem was not confined to Greece and contagion fears across the euro zone led to volatility in world markets last week, and sent the euro to a 14-month low against the U.S. dollar.
In a desperate bid to safeguard the financial stability of the euro zone, EU finance ministers agreed early Monday on an unprecedented rescue mechanism worth up to 750 billion euros (956 billion dollars) to prevent the spread of the Greek debt crisis and rebuild market confidence.
The European Central Bank (ECB) also decided to take a series of exceptional measures in the debt and currency markets to help maintain the stability of the euro zone, including purchase of euro zone government bonds, dubbed the "nuclear option" by many economists.
World markets gave an initially positive response to the rescue mechanism available to other euro zone country faced with similar problems.
EU President Herman Van Rompuy told the same panel that "radical fiscal policy" would be adopted later this year to improve economic surveillance and coordination in the EU.
"This is the moment for political courage.....We must make huge efforts to have more economic governance," he said.
Clouded by the Greek debt crisis, policymakers and business leaders will hold a wide-range discussion in the next two days under the theme "Renewed Leadership, New Vision."
"We are holding this meeting at a critical moment for the European Union. The EU's new leadership team is facing serious challenges at a time when Europe needs to reassert itself on the world stage," said Stephen Kinnock, head of WEF's Europe and Central Asia division.
"This meeting will provide that team with an opportunity to outline its vision for the future of Europe and to engage with other key stakeholders who will play an important role in delivering it," Kinnock added. |
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