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Sweden may support euro countries in crisis

TT/The Local/vt · 17 Dec 2010, 16:43

Published: 17 Dec 2010 16:43 GMT+01:00

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EU leaders have paved the way for a new emergency fund to bail out vulnerable euro countries through a treaty amendment. According to the draft agreement, the permanent crisis mechanism will be activated according to the draft "if the entirely euro area's stability is threatened."

EU countries who continue to use their own currencies, namely Sweden, Denmark, the UK, Poland, Estonia, which joins the eurozone on January 1st, 2011, Latvia, Lithuania, the Czech Republic, Hungary, Bulgaria and Romania, are governed by one particular point in the conclusions.

"The member states that do not have the euro as a currency may, if they wish, participate in this work. They may decide to contribute to activities within the framework for the mechanism on a case by case basis," the draft states.

A two-sentence amendment to the EU treaty paves the way for the creation of a permanent emergency fund. After just one and a half hours of discussion, European leaders agreed on a treaty amendment, which states that the fund should only be used when no other means exist.

"We are ready to do everything necessary to secure financial stability in the euro area," EU Commission President Jose Manuel Barroso said when the meeting ended late on Thursday night.

Although the permanent emergency fund was created for the euro zone, Sweden and the other countries outside the eurozone were present when EU finance ministers began discussing details.

Sweden currently supports Iceland, Latvia and Ireland. Reinfeldt has not excluded the possibility of Sweden once again intervening to support crisis-hit countries both in and outside the eurozone.

However, he emphasised that for Swedish support to happen now would involve geographical proximity or financial ties, as well as a clear and reliable restructuring plan and IMF assistance.

"Our starting point is that we make a decision ourselves from case to case. This is about loans and not support - adjusted to conditions on the market," said Reinfeldt.

"We will look at how the country in question deals with reform so that we feel that we are heading in a direction that will generate growth and improve public finances. A stable euro and a well functioning eurozone is good for Sweden," he added.

The temporary fund of €440 billion (3.97 trillion kronor, $583.4 billion), which was established in the spring spring and runs until mid-2013 when the permanent fund takes over, has been used to help Ireland.

However, many doubt that there will be enough money to help Portugal, Spain or other strained euro countries that may need support. As such, the current needs require replenishing the fund.

"Very little of the fund's resources have been used, only 4 percent," said President of the European Council Herman Van Rompuy.

"The EU and the euro area will be stronger from the crisis," the European Council wrote in its conclusions from the top-level meeting, according to a draft obtained by news agency TT.

Story continues below…

"The growth prospects are strengthening and the fundamentals of the European economy are sound," EU leaders told the council.

However, according to the conclusions, the crisis "demonstrated that there is no room for complacency."

In their conclusions, EU leaders gave a nod to Greece and Ireland in recognition of what they described as "impressive progress" in terms of their restructuring programmes and budget decisions. At the same time, they stressed the importance of implementing existing programmes fully.

The EU leaders also agreed to give Montenegro candidate status, the first step towards negotiations on future EU membership.

TT/The Local/vt (news@thelocal.se)

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Your comments about this article

17:04 December 17, 2010 by Vanity_of_the_Bonfires
Don't do it Sweden, your in good financial shape and bailing out the PIIGS will only be throwing your hard earned money down a black hole. You can't fix a debt problem with more debt. Keep your money, it's not your fault your southern neighbors spent way more that they took in. There is no reason for the swedish taxpayer to take on this burden. The PIIGS situation will not end well no matter what you do.
17:34 December 17, 2010 by lux.veritas
Most may not know that they already do. Sweden is a lender to the IMF. Thus Sweden through its Central/ bank in private hands is using Swedish people's money to create debt and profit from impoverishing nations abroad.

This is not for the Swedish tax payer you see. It's profit for the self-styled elite at our expense. Collectivists will always band together to pick the bones of others.

Be clear; it's not lets help, it's lets help ourselves. Loan means control. As with other resources; because nothing grows here, it's good to keep Mediterranean and North African and other agriculture countries in check, so as not to lose your supply.

The weapon of today and tomorrow is food, that's why most of the processed stuff is inedible or simply a slow poison for living organisms. There are big profits for a finite group of top players and drippings for the rest. Maybe it time to bring back Madame La Guillotine.
23:52 December 17, 2010 by jackx123

Agree that food is the future. however, sweden's contribution shall not be seen as rocking the earth with e.g. germany's gdp 10x sweden, but i do agree with "throwing money down a black hole".

it has been proven beyond doubt that the ONLY way greece can repay its loan is to devalue its euro.....and this can only be done by lowering its cost base by a staggering 30%, unless they exit the emu.
09:48 December 18, 2010 by Nemesis
What is being conveniently ignored in this, is that Sweden had to be bailed out in the 90's.

Also a lot of the bad debt orginated from loans by Sweddish banks, so if someone defaults it hits Sweden as well.

On top of that Sweden is an eager supporter of the IMF which went after the pension reserve in Ireland.

Swedes can be hypocritical if they want. The reality is, they are part of the problem because of bad international banking.
17:32 December 19, 2010 by wenddiver
Iwas looking at the list of countries who kept their money, would it be fair to say , excluding them, that the euro Zone consists of France, Germany and everybody broke in Europe?
19:34 December 19, 2010 by Nemesis
@ wenddiver.

Wrong, as usual.

I have noticed that the US dollar is broke.
00:08 December 20, 2010 by wenddiver
@nemisis- Yes we are part of a a large Federal Union in the US that bails out the inmature States that overspend(California, New York) and penalize the balanced budgets in the South and Midwest, by making them pay for the other's adventures in Socialism. Re-inforcing my point, why would Europe'sintelligent countries emulate that path, I know why the broke sign up.
04:27 December 20, 2010 by GLO
Sweden, hold your own everything. Close the Bridge to all but truck traffic,keep your own money, stop inviting everyone to dinner. Keep your own culture. Dont be lured into the EU.Dont reward faliure with your own had won funds.Sweden cant print enough money to hold up the failed country's that do not say no to waste. The next few years are going to bad, save your treasure for Sweden, your going to need it.
14:22 December 20, 2010 by leiiel
Sweden needs to support its own crisis of an extremely low quality healthcare system. I want MY tax money spent on quality medical care for myself and my family, neighbors, friends, community, etc. Sweden treats its tax-payers like crap. Taxes are just a way to rob and control you.
12:52 December 22, 2010 by andreasbe
@Nemisis: Where are you from? whats your issue with Sweden?
22:15 December 31, 2010 by tomas R

Innovations, inventions, industry, natural resources. It means the power of the country. Of course people must have the jobs, to get good salaries. Money must rotate by the circle. In this way every country could live without financial support. I think that Sweden has these standards!

Happy New Year!

tomas (Lithuania)
08:17 January 2, 2011 by landofthesheeple
Sweden is already helping other EU countries financially by taking more immigrants and asylum seekers then they can handle. It's placing a heavy burden, not only on the Scandinavian culture, but economy as well.

Perhaps instead, Sweden should focus on placing all of this "Extra Money" in to things like the social medical system?
00:43 January 19, 2011 by theTRUTH4u
Please hold the position and do NEVER give in to being part of the Euro - that will be the end of Sweden and our economy.

Bailing out other countries that were stupid enough to join the Euro dollar is NOT SWEDEN'S PROBLEM!

We need to protect our currency and our own future.
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