Spain and Greece call on EU to extend existing bailout fund to eurozone nations

Spain, Greece call for bailout fund

BRUSSELS — Spain and Greece called on the European Union to use an existing euro50 billion ($67 billion) bailout fund to offer cheap loans to Greece or other struggling eurozone governments.

The fund has raised money at low rates by borrowing from bond markets and passing the loan on to Hungary, Latvia and Romania as part of rescue packages led by the International Monetary Fund.

The fund is used to help EU members that haven’t adopted the euro, but Spanish and Greek leaders said its mandate could be broadened to assisting eurozone countries.

Greek Prime Minister George Papandreou said the proposal drawn up by Europe’s socialist party “is a solution that could be decided even today.”

“It is on the table and I think it opens up a new future for Europe,” he said after a meeting of socialist leaders ahead of a two-day summit of European Union heads of state. “It’s a clear solution and a simple one. It shows that if there is a will, there is a way.”

Only five of the EU’s 27 countries are led by socialist governments: Spain, Greece, Austria, Hungary, Slovenia.

The head of Europe’s socialist party Poul Nyrup Rasmussen said they were proposing “to change the regulation on the community facility for non-eurozone member states in order to cover eurozone members.”

He said the EU’s executive commission could then take out loans on the market and offer the loan to Greece and others.

“I can tell all German taxpayers, this will not cost you one euro,” he told reporters.