Vienna, 11 June 2012 Fekter: “Aid for Spain via the ESM would be a better safeguard” The permanent safety net provides for better rules

Following the commitment given by Eurozone finance ministers last Saturday to furnish Spain with up to EUR 100 billion to rescue its distressed banks, Spain has now decided to apply for aid from the European stability fund.

Austrian Finance Minister Dr Maria Fekter would prefer to see the aid package being provided to Spain (up to EUR 100 billion), which is intended to stabilise the Spanish banking industry, come out of the future permanent safety net, the “ESM”. Dr Fekter stated: “Although the current ‘EFSF’ rescue fund is technically in a position to provide the aid Spain needs straight away, the permanent safety net would provide for better arrangements. This is particularly true in terms of putting safeguards in place in case something happens later on.”

Originally, the ESM was to take effect at the beginning of July, but thus far only a few European governments have ratified it. Austria is still in negotiations on an agreement regarding the ESM. Dr. Fekter: “We are already at a very advanced stage of negotiations and I hope that an Austrian agreement on the ESM will be finalised in the next several days. If parliament goes into a special session, then my proposal is for parliament to pass the ESM during that special session.”

Finance Minister Dr Fekter discounts concerns expressed by some that, as in the case of Greece, repayment of the loans being granted to Spain appears to be uncertain. Dr Fekter responds to the suggestion that these loans may have to be written off by saying that “the case of Spain is quite different. This case does not involve flows of bilateral funding, but rather it involves deployment of the European safety net. The loans to Greece are still outstanding, just as before.”

With the objective of achieving a long-term way out of the crisis and a sustained calming of the Eurozone situation, Dr Fekter appeals to the need for Eurozone solidarity. “What one still sees in the Eurozone is a situation of economic disparities. That is why we are trying to redress these imbalances through the rules we already have in place and by exercising strict controls. We will have to stand together even more firmly than we have in the past – both in terms of fiscal policy and in terms of the way we deal with the financial sector”, Dr Fekter stated in closing.