BRUSSELS -- The Greek election on June 17 is about the country's commitment to reforms and to the euro, European Union economics chief Olli Rehn told an academic audience at Oxford Thursday.
Rehn said that Greece's ambitious reform program has stalled because of vested interests and poor administration.
"As we all know, in Greece, adjustment has been slower and return to growth is delayed," Rehn said, and explained that was "Mainly because of the obstacles to reform and growth created by vested interests, lack of national unity and weak administrative capacity."
He reiterated that the EU wanted Greece to stay in the euro, but that the country's fiscal and economic adjustment program was instrumental in that.
"The reform program is geared to overcome...obstacles and enable Greece to stay in the euro, which we want," he said.
The European Commissioner for Economic and Monetary Affairs also said that Spain had recently come under pressure from the markets, but that its actions to contain economic and banking troubles had been convincing.
He added that the programs in Ireland and Portugal, which, like Greece, are co-sponsored and co-designed by the EU and the International Monetary Fund, were "on track."
Weighing in on the debate over fiscal consolidation and growth which is gripping euro-zone policy-making, Rehn advocated striking a fair balance between the two but stressed that it would be folly to loosen fiscal-adjustment targets for countries under market pressure.
While noting that fiscal consolidation is not a "straightjacket" and that the EU fiscal rules reflected in the Stability and Growth Pact aren't "stupid," Rehn said that "vulnerable member states under close market scrutiny need to convince both market forces and policy-makers of their capacity to tackle their fiscal and other economic challenges and, once again, create confidence."
However he noted that EU finance ministers had already agreed that "those member states with greater fiscal space should let the automatic stabilizers function fully."
-By Matina Stevis, Dow Jones Newswires; 003227411483; [email protected]