France's Lagarde: EU rescues violated rules: report

By @ibtimes on

Euro zone policymakers deliberately chose to violate the bloc's rules in rescuing Greece and Ireland, closing ranks to protect the single currency area's future, French Economy Minister Christine Lagarde was quoted as saying.

The EU's governing Lisbon Treaty places constraints on bailouts. European leaders agreed at a summit on Thursday to amend it by creating a permanent financial safety net from 2013.

In comments reported on Saturday by the Wall Street Journal, Lagarde said the amendment amounted to a major adjustment, but that a change was necessary after the tumult of this year's debt crisis.

The Greek and Irish bailouts and the creation of a temporary European rescue fund had been major transgressions of the treaty.

We violated all the rules because we wanted to close ranks and really rescue the euro zone, Lagarde was quoted as saying.

The Treaty of Lisbon was very straight-forward. No bailout.

The summit approved a two-sentence amendment to the treaty at Germany's behest to permit the creation of a European Stability Mechanism to handle financial crises from 2013.

The ESM, to replace a temporary European Financial Stability Facility created in May, will be empowered to grant loans on strict conditions to member states in distress, with private sector bondholders sharing the cost of any sovereign debt write-down on a case-by-case basis.

The aim is for all 27 member states to ratify the change by end-2012.

(Reporting by Leigh Thomas; Editing by John Stonestreet)

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