Sunday, May 15, 2011

'Secret, dark debates' fan flames of eurozone turmoil - Telegraph

Political union frays at the edges as tensions and resentments rise ahead of a critical meeting on Monday on the debt crisis in Greece and a bail-out for Portugal.

An undercurrent of anger, suspicion and mistrust will per-meate on Monday night's critical meeting of eurozone ministers in Brussels as they grapple with a spiralling Greek debt crisis and try to seal a €78bn (£69bn) bail-out for Portugal. As if the euro's problems were not enough, seething resentments will add a new political dimension to the talks.

The inclement mood was set 10 days earlier beside a gently babbling brook and old water mill that speaks of Europe's troubled past. On Friday May 6, Jean-Claude Juncker, Luxembourg's prime minister and the chairman of the eurogroup of single currency members, called a secret meeting of the European Union's most powerful countries at the picturesque Chateau de Senningen on the outskirts of the tiny Duchy state.

Gathered at the 18th century former paper mill, which served as an artists' retreat during the Nazi occupation, were finance ministers from Germany, France, Italy and Spain – the euro's G20 members, Jean-Claude Trichet, president of the European Central Bank (ECB), and Olli Rehn, EU commissioner for monetary affairs. Top of the agenda was the fate of Greece, after the International Monetary Fund (IMF) – on the hook for €30bn of the original €110bn rescue –demanded that the EU come up with a new strategy as the Mediterranean country continued to plunge into debt and recession.

Sparking rumours that Athens was set to leave the euro, George Papaconstantinou, the Greek finance minister, was summoned to Senningen to explain how his country could take further savage austerity measures and speed up privatisation of lucrative state-owned industries.

As news of the meeting leaked out, financial markets went into spasm sending the euro into a nosedive. In a desperate bid to end the turmoil, Mr Juncker, who had not informed other eurozone finance ministers of the meeting, chose to lie. "I totally deny there is a meeting," said his spokesman, as speculation mounted. Mr Juncker had already horrified many of his counterparts by openly bragging last month that he often "had to lie" to suppress public debate over eurozone econo-mic policies which, he claimed, were too important for open contemplation.

"I am for secret, dark debates," he said. "When the going gets tough, you have to lie."

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