Bailout fund hint highlights tensions

The Belgian Finance Minister has hinted that the €750 billion ($1.3 trillion) EU bailout fund could be increased, in a further sign of the confusion and discord over the best way to tackle the Eurozone debt crisis.

Didier Reynders said the facility could be boosted as part of European governments' discussions about creating a permanent rescue fund from 2013.

"If we decide this in the next weeks or months, why not apply it immediately to the current facility?" Reynders said, echoing comments from Jean-Claude Trichet, the head of the European Central Bank last week.

Talks about a permanent rescue mechanism started last month in an effort to allay fears that the debt crises wreaking havoc in Greece and Ireland would spread to larger countries that Europe could not afford to bail out.

With reference to the 2013 fund, Trichet said it was "extremely important that everything is commensurate to the dimension of the challenges", while also calling for a quantum leap in fiscal governance to help beat the crisis in confidence whipping through the bond markets.

But suggestions of a boost in rescue funding run directly contrary to the position taken publicly by EU heavyweights Angela Merkel, the German Chancellor, and Nicolas Sarkozy, the President of France.

Despite clear commitment to the creation of permanent crisis mechanism, the German Government last month overtly rejected an increase in the fund after comments hinting at an expansion from Axel Weber, the president of the country's Bundesbank.

The German Finance Ministry has also categorically denied newspaper reports that the fund was set to double in size.

Separately, Trichet was awarded Germany's Charlemagne Prize for strengthening European unity at the weekend, for his efforts in steering the eurozone through the current crisis and defending the stability of the currency.

- INDEPENDENT