Russia to save European Union from drowning

Russian President Dmitry Medvedev at the G20 summit in Cannes has promised financial support to the Eurozone because Russia is part of Europe and is concerned about its problems. No specific numbers were mentioned, but the Russian leader said that foreign aid cannot be decisive, and Europe must save itself.

In late October the EU summit adopted an anti-crisis plan for Europe. It was decided to write off half of the Greek debt, provide additional funds for the Greek debt restructuring, more than double the capital of the European Foundation for financial stability (EFSF), and involve BRICS countries in the refinancing of the Eurozone debt. In turn, Brazil, Russia and India have expressed their willingness to support the Eurozone through the IMF. In this respect the European stabilization fund was not mentioned.

Earlier, China with its foreign exchange reserves amounting to $3.2 trillion was mentioned as the main "helper" for Europe. At the summit, the heads of BRICS countries (Brazil, Russia, India, China, and South Africa) promised to form a consolidated position on the economic situation in the EU. Hu Jintao voiced the existing position of Beijing, according to which Europe has everything available to deal with its debt problems. Russia, according to President Medvedev, is ready to participate in the program of providing financial support to the EU, but is going to do this "consciously and transparently." In particular, he declared his readiness "to participate in the programs of financial support for the EU countries, at least through the IMF."

Speaking about the current situation, the Russian head of state noted that distrust of markets for financial recovery plan in the Eurozone was due to the uncertainty regarding the timing and methods of reducing the debt burden. In some countries the debt exceeds 80% of GDP, with the economy growing at 1-2% per year. In these circumstances, there is an urgent need to implement measures to reduce costs. "The countries with excessive debt burden should immediately begin fiscal consolidation. For the Eurozone countries that are considered a safe harbor by the markets it would be appropriate to support the demand and thereby ease the situation for the weaker partners," RIA Novosti quoted the Russian President.

Due to the size of the European economy, "no foreign assistance can be decisive." "Europe has to help itself. The European Union today has everything to do it, both political and financial resources, and support of many countries", stressed the President. Large businesses should shoulder the burden of saving the Eurozone and ensure the sustainability of financial institutions, the head of state said. Three years ago the authorities of G20 prevented the collapse of the financial markets and banks by providing large-scale assistance. Yet, the price that was paid for the rescue proved "unaffordable" for many economies, and the debt burden immobilized the Governments of many developed countries.

"Therefore, I am sure that today it is large businesses that have to assume the burden of leadership and ensure the stability of the financial institutions, primarily on their own," said the head of the Russian state.

Vladimir Shabanov

Bigness

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