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;
matina.stevis@dowjones.com