Reply #40: Warnings Mount against Concessions to China [View All]

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http://www.spiegel.de/international/europe/0,1518,795202,00.html

In the run-up to last week's European Union summit, the consensus was clear. Europe's bailout fund, the European Financial Stability Facility, was simply too small. The fund's lending capacity of €440 billion would never be enough, it was said, to stop the spread of contagion to larger euro-zone economies like Italy and Spain.

Now that euro-zone leaders, led by Chancellor Angela Merkel and French President Nicolas Sarkozy, have agreed to leverage the EFSF, however, they are realizing that finding investors to back an increase in the fund's lending capacity to €1 trillion might not be as straightforward as they first thought. Indeed, European fundraising is likely to play a major role at this weekend's G-20 summit in Cannes, France.

So too, though, are warnings that the euro zone should steer clear of acceding to possible Chinese demands for concessions should it invest in the EFSF.

"If we in Europe organize the stabilization of the euro in such a way that we allow states to exert political influence from outside, then we are making a tremendous mistake," Hans-Peter Keitel, president of the Federation of German Industry, told SPIEGEL ONLINE in a Monday interview.