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Finland minister: Bid to stem euro crisis is working

From Nina dos Santos and Oliver Joy, CNN
October 2, 2012 -- Updated 1249 GMT (2049 HKT)
  • Finland's European Minister Alexander Stubb tells CNN Europe's debt crisis may be abating
  • European Commission President wants Europe to become more unified
  • But Stubb says treaty change to solve the eurozone debt crisis is not the right approach

London (CNN) -- Europe's political and economic attempts to stem the eurozone debt crisis may finally be getting results, Finland's European minister Alexander Stubb has told CNN.

Stubb told CNN a combination of political action and monetary intervention in the eurozone over the last month had put Europe on the road to economic recovery. "If we play our cards right, I think we will have turned the corner of this crisis," he said.

Earlier this month, European Central Bank President Mario Draghi announced a program to buy bonds of fiscally-frail countries such as Spain and Italy. A week later, the German constitutional court green-lighted the European Stability Mechanism -- the region's 500 billion euro ($651 billion) permanent bailout fund -- to come into force in October this year.

A victory for pro-European parties in the Dutch elections this month was also a sign that electorates in Northern European countries have not lost faith in the 17-nation currency bloc.

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Stubb told CNN Europe was stuck in a "vicious cycle" between politicians, the media and the markets, which was hindering the speed of economic recovery. He said the issue was: "Politicians talking loose stuff, media interpreting that loose stuff and then markets reacting to what the media reports."

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Stubb said debt-ridden countries like Spain and Italy were taking the necessary steps to reform but reiterated the ECB's message of conditionality in exchange for aid. He added: "I have a lot of respect for the Spanish government because they have taken a lot of tough decisions in the past few months."

The 44-year-old is in favor of a banking union -- a proposal from Brussels which would give the European Central Bank a supervisory role for more than 6,000 eurozone banks. But, he said, "we cannot be in a situation where those banks which have taken care of their funds, have a good balance sheet, would be paying for those banks which haven't done so well."

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Stubb's comments follow his speech to The Institute of International and European Affairs in Dublin, Ireland, in which he was skeptical over calls for a more integrated Europe. Of such an idea, he said: "We do not have the time, nor can we introduce an element of further uncertainty."

Such a stance runs contrary to that of European Commission President Jose Manuel Barroso, who told CNN Europe needed to be more unified.

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