Finnish Prime Minister Jyrki Katainen said he is afraid Europe is repeating the “same mistakes” in its handling of the debt crisis as efforts to contain the region’s turmoil falter.
“The road to hell is paved with good intentions,” Katainen said today in a speech in Tampere, Finland. “Markets are not good or bad, they are logical.”
European finance chiefs will today work on the details of plans to increase the muscle of the European Financial Stability Facility in a bid to shield countries such as Italy and Spain from the spread of the debt crisis. Leveraging the fund would aim to boost its spending capacity to 1 trillion euros ($1.4 trillion).
European Union treaties need to be “more realistic, not idealistic,” Katainen said, adding that the region is considering changes to the treaty to help end the turmoil.
Greek Prime Minister George Papandreou yesterday agreed to step down to allow the creation of a national unity government intended to secure international financing and avert a collapse of the country’s economy.
In Italy, Prime Minister Silvio Berlusconi faced pressure to quit as the country’s 10-year borrowing costs approached the 7 percent level that forced Greece, Ireland and Portugal to seek bailouts.
It is imperative that EU members stick to the bloc’s fiscal rules, Katainen said, adding that a Greek rejection of the nation’s bailout terms would only result in deeper cuts and that Italy must deliver the austerity measures that it has pledged.
Resolving Europe’s debt crisis is of the “utmost urgency,” he said.