Europe Moves Closer to Bigger Bailout Fund

Posted September 30th, 2011 at 2:00 pm (UTC-5)
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Europe moved closer Friday to adopting a bigger bailout fund to assist debt-ridden countries, with Austria the latest country to approve its expansion to $593 billion.

Austria became the 14th of the 17 nations that use the euro currency that need to approve the expanded fund. Some financial experts are saying the fund will need to be even larger, perhaps several trillion dollars in size, to cover possible future bailouts of weaker governments.

Malta, the Netherlands and Slovakia have yet to vote. Slovakia could be the remaining roadblock, with its governing coalition divided about new support for financially troubled Greece as Athens attempts to avoid a default on its bailout from last year.

Greek Prime Minister George Papandreou met Friday in Paris with French President Nicolas Sarkozy in his continuing push across European capitals for a new $11 billion segment of its $159 billion bailout from international creditors. After the meeting, the French leader said the continent has a “moral obligation” to support Greece.

Mr. Sarkozy said he would meet with German Chancellor Angela Merkel in the coming days to further coordinate efforts to support Greece. Germany and France have Europe's two strongest economies, and Greece one of its weakest.

Auditors from the International Monetary Fund, European Central Bank and European Union are in Athens looking at Greek efforts to slash its huge debt. The inspectors will recommend whether Greece should receive the new bailout installment.

The inspectors have had to reschedule some of their meetings as civil servants protesting the Greek government's austerity measures have occupied the offices where the audits were to occur.

Without the new funds, Greece says it could default on its loans in October, which could undermine the stability of the euro and further disturb world financial markets.

While dealing with the European debt contagion, the continent also faces rising consumer prices. A new report Friday said inflation hit 3 percent in September, well above the European Central Bank's target of just below 2 percent.