Where is truth

EURO ZONE: Europeans snatch an agreement to save the euro

AFP - The euro zone countries have managed to curl in pain Thursday morning the outlines of an anti-crisis plan, through a sharp reduction in debt of Greece and the mobilization of 1,000 billion euros to prevent contagion, but still unknown.

After nearly ten hours of negotiations at a crucial summit in Brussels, French President Nicolas Sarkozy spoke of a compromise "credible" and "ambitious" and the Executive Director of the IMF, Christine Lagarde, the "substantial progress ".

"I think we have to live up to expectations and we did the right thing" for the euro, said German Chancellor Angela Merkel.

EU leaders managed to raise a block in extremis on a central point of their defense system deal with the crisis that destabilizes the common currency for two years: the deletion of part of the Greek debt held by the creditor banks the country.

The agreement with the banks is on a waiver of 50% of their claims, one hundred billion out of the country's public debt of 350 billion euros.

Athens will also receive new loans from Europe and the IMF to 100 billion euros by the end of 2014 also, as part of a program that replaces the 109 billion euros agreed in July.

Greek debt was the last major sticking point of the summit. Asian stock markets have blown.He was on the upside after this breakthrough Thursday.

"A new era for Greece," said Greek Prime Minister George Papandreou.

Nicolas Sarkozy, Angela Merkel and Christine Lagarde had to intervene personally in the night to find a compromise with the banks, while the talks were stalled. The negotiations were "very hard", according to the Greek Prime Minister George Papandreou.

On July 21, a first agreement was reached with the banks to reduce by 21% Greek debt they hold.

But this is not enough and the country is now strangled.Hence the efforts for several weeks to go much further.

Germany has exerted intense pressure, requiring the greatest possible effort, more than 50%, threatening the banks to go through the hard way if necessary, that imposed a restructuring of the Greek debt.

France and the European Central Bank opposed this for fear of a domino effect throughout Europe.

In return for the effort required for the banking sector, an agreement was reached to recapitalize institutions in need.

Specifically, the needs have been estimated at 106 billion euros by the European Banking Authority (EBA). However, markets believe they are much higher.The IMF itself has talked about 200 billion euros.

In addition, countries in the euro area have decided to multiply the firepower of their relief fund for countries in financial difficulty in bringing it to 1,000 billion euros in the first place.

This envelope should prevent the debt crisis earns Italy and Spain.

Currently, the Relief Fund (EFSF) has a theoretical capacity of loans 440 billion euros, envelope considered inadequate given the scale of turbulence.

Countries in the euro area have adopted a mechanism to mobilize more funds, but that States spend more: a "leverage".

In this case, it will be to provide a system of credit insurance to investors to encourage them to buy public debt of fragile states. Specifically, the EFSF guarantee a portion of the debt in case of failure of the borrowing.

Of the 440 billion euros in the beginning, the EFSF still has 250 to 275 billion euros available. With this option the ability to mobilize the Fund will increase to about 1,000 billion.

In this device would be added another mechanism: a special fund backed by the IMF and welcoming the contributions of countries such as China and Russia.But that last part is not possible to quantify the state.

China and Russia have stated their interest and the Head of French State Nicolas Sarkozy plans to discuss this issue with Chinese President Hu Jintao on Thursday.

It is not clear, however, that the amount of 1.000 billion euros is enough to reassure financial markets.They waited behind the double.

A meeting of EU finance ministers is planned to finalize the details.

Final part of the anti-crisis: the euro area relies on the continued support of the ECB, which currently keeps afloat Italy and Spain by buying government debt markets to prevent borrowing rate bond not fly.

Italy's Mario Draghi, who is to succeed in early November to Jean-Claude Trichet has indicated Wednesday that he would continue on the same track now measures "unconventional" monetary institute of the crisis.

Mr Sarkozy was "delighted" to these statements which show that the ECB is "behind" the decisions taken.The role of the ECB in the mechanisms against the debt crisis was the center of a tug-of France and Germany in recent weeks, Berlin denying that the Institute is directly involved in EFSF.

For Italy, it is time for healing. Fearing a contagion of the crisis in this country, European leaders had pressured the prime minister, Silvio Berlusconi, for it gives them guarantees on reducing its debt in exchange for their support.

Mr Berlusconi has made Brussels a letter promising reforms, which made "a good impression," the Polish Prime Minister Donald Tusk.