EU president urges fast approval of Greek aid

The head of the European Council, Herman Van Rompuy, called on Wednesday for eurozone members to speed up their approval of the latest support package for Greece amid growing concern that Spain and Italy will be engulfed by the debt crisis.

Van Rompuy met in Madrid with Spanish Prime Minister Jose Luis Zapatero, who cut short his holiday to address the concern being caused by his country?s spiraling borrowing costs, which have reached levels close to those that triggered the bailouts of Greece, Ireland and Portugal. The two men indicated that if Athens sticks to its reform program and the eurozone gives the European Financial Stability Facility (EFSF) – a fund created in the wake of the Greek crisis – greater flexibility, it might help restore investor confidence in the euro.

?They agreed on the need for the agreements on the Greek rescue plan and the reform of the European mechanism of support for eurozone countries to be approved as soon as possible by European governments to give certainty and confidence to financial markets,? the Spanish government said in a statement.

Concern has been expressed in some eurozone countries about the fact that governments will have to lend Greece money when they are facing borrowing problems of their own. The premium for buying Spanish 10-year bonds over German notes surged to more than 400 basis points yesterday, the highest since the introduction of the euro. European Commission spokeswoman Chantal Hughes insisted that all members of the eurozone would contribute to the 8-billion-euro loan installment for Greece next month.

However, European Commission President Jose Manuel Barroso indicated that the debt crisis, which claimed Greece as its first victim, was beginning to expose potential systemic weaknesses in the eurozone. ?The tensions in bond markets reflect a growing concern among investors about the systemic capacity of the euro area to respond to the evolving crisis,? he said in a statement.

Greek Finance Minister Evangelos Venizelos described the situation as ?a wound at the heart of Europe.?

Italian Prime Minister Silvio Berlusconi said that his country was ?financially and economically stable? but called for a new round of reforms on top of a recent 48-billion-euro austerity package as Rome?s bond spreads also reached record highs.

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