Euro chiefs call for quick debt crisis plan implementation

Top eurozone policymakers pressed governments on Monday to swiftly implement a new Greek bailout and measures to shield the euro from the debt crisis as problems threatened to hold up the deal. The eurozone gave itself until early September to put in place a second Greek rescue and expand the powers of their debt rescue fund after leaders approved the package at an emergency summit on July 21. But the Greek bailout is stalling over Finnish demands for Athens to offer collateral and the package must also be approved by all national parliaments. European Central Bank President Jean-Claude Trichet, European Union economic affairs commissioner Olli Rehn and Luxembourg Prime Minister Jean-Claude Juncker, head of the Eurogroup of finance ministers, all pleaded for quick implementation of the aid package. "The full and timely implementation of the July 21 agreement between heads of state or government is of essence in this respect," Trichet told a special session of the European Parliament's economic affairs committee. "While a special arrangement for Greece has been launched, the inflexible determination of all other euro area governments to fully honour their own individual sovereign signature is key in returning to sustainable and healthy public finances and contribute to stable market conditions," he said. Rehn told the same committee. "We have called on the euro area member states to accelerate the approval procedures for the implementation of these decisions, so as to make the EFSF enhancements operational very soon." Last month's summit decided to widen the scope of the European Financial Stability Facility to prevent future crises by allowing the EFSF to buy bonds from struggling eurozone nations on the secondary market. This role has been reluctantly played by the ECB, which this month bought billions of euros in bonds after market concerns about the fiscal health of Italy and Spain caused the borrowing costs of both nations to soar. Juncker, chairman of the group of eurozone finance ministers, said negotiators were "very close" to reaching a compromise on Finland's demands for collateral from Greece. He did not provide any details but he criticised the arrangement. "We should translate the decisions of July 21 into fact rather than be launching new immature ideas," Juncker said. Eurozone leaders approved a new 109-billion-euro bailout for Greece in July to save the country from bankruptcy, with the private sector providing another 50 billion euros ($72 billion). Helsinki and Athens later brokered a deal in which Greece would provide cash collateral to Finland but the deal was rejected by other eurozone members, notably Germany, Europe's paymaster. The European affairs ministers of Germany and Finland voiced optimism on Monday that a compromise would be hammered out. "We are going to stick to the calendar ... I'm very optimistic," German European Affairs Minister Werner Hoyer told reporters in Helsinki after talks with his Finnish counterpart. The wrangling over the crisis plan has unnerved markets already worried about the sluggish economy in the eurozone, with growth slowing to 0.2 percent in the second quarter after expanding by 0.8 percent at the start of the year. "Looking ahead, we continue to see the euro area economy growing at a modest pace in a context of overall relatively sound economic fundamentals for the euro area as a whole," Trichet said. "At the same time, not least because of the recently re-emerged tensions in financial markets, uncertainty remains particularly high. "This mainly relates to ongoing fiscal and economic adjustment in a number of euro area countries and most other advanced economies, as well as the overall outlook for the global economy. Rehn said the market turmoil and high oil prices contributed to a "deterioration of the growth outlook. "The short-term growth prospects have somewhat worsened compared to our spring forecast," he said.