For the third time in recent weeks, the Party of European Socialists (PES) has called on European Commission President José Manuel Barroso to adopt their solution in an open letter to the ongoing instability in the Euro-zone. In an open letter, PES President Poul Nyrup Rasmussen stated that;

“With a view to contributing to your efforts, the Party of European Socialists has on Tuesday 2nd March 2010, proposed a stabilization plan (entitled the European Mechanism for Financial Stability) to set up a long-term crisis-management mechanism in the Euro-area. It represents a truly European solution to a truly European problem.”

Mr. Rasmussen made his comments ahead of Greek Prime Minister George Papandreou’s meetings, early this week, with US President Barack Obama, as well as with representatives of the International Monetary Fund (IMF).

The 2nd March announcement and today’s open letter followed on from a declaration made by PES Prime Ministers on 10 February.

“Now is the time to identify solutions, not just for Greece, but those which ensure that this crisis is the last time that any Member State should undergo the humiliation of announcing, not one, not two, but three sets of austerity measures on the basis of the markets’ requests”, added Mr. Rasmussen.

The European Mechanism for Financial Stability consists of the establishment of a ‘trustee fund’ by the euro-area Member States, which can borrow funds on the markets. The fund can then provide a conditional loan to a Member State facing difficulties in accessing financing at a fair price due to speculative pressures. The plan, based on Article 122 of the Lisbon Treaty, does not involve any transfer of funds from the Member States to their partner. It is only intended to ensure that speculative attacks on sovereign debts in the euro-area will quickly become a thing of the past. The euro-area should be equipped with an anti-speculation mechanism as the non-euro EU Member States are, with the well-functioning EU facility for balance of payments.