Eurozone finance ministers lock horns over debt crisis

Brussels: Eurozone finance ministers met yesterday over how to fight their crippling debt crisis, which some fear could yet push Portugal to need a bailout and spread to infect the region's larger economies.

At the centre of talks in Brussels, which will continue today, is the region's €750 billion ($1 trillion, Dh3.67 trillion) bailout fund, set up last spring to convince financial markets anxious over some countries' mounting debt levels that the euro currency was safe.

The European Union's executive Commission — supported by the head of the European Central Bank and some finance ministers — has said the fund needs to be given more money and powers to quell any concerns that it could be overwhelmed if a big economy like Spain runs into trouble.

Increase ruled out

But Germany, the Eurozone's economic powerhouse, has so far ruled out any substantial increase of the fund's size.

German Finance Minister Wolfgang Schaeuble insisted yesterday that bolstering the fund so it can actually lend out the advertised €750 billion — which it currently cannot do due to technical reasons — is as far as his country will go.

The rescue fund for troubled euro zone states needs to be replaced and reinforced, and a draft agreement on the revised form it should take should be in place by March, French Economy Minister Christine Lagarde said.

Euro zone countries are in agreement on the broad principles for updating the European Financial Stability Fund, Lagarde told Europe 1 radio.

"It needs to be replaced and reinforced. We have started talks...and agree on the big principles, we are looking at how it could be applied," she said.

The EFSF can borrow on the market with euro zone government guarantees of up to 440 billion euros.