EU debt woes to linger, says bailout fund head

BEIJING (AP) – The head of the European bailout fund Klaus Regling said he expects the eurozone’s economic problems will last two to three years, and long-term issues will remain.

Regling’s remarks suggest Europe still faces a long road to recovery from its sovereign-debt crisis, even after a summit of European Union leaders this week set a new course to address the debacle, Dow Jones Newswires reported.

“I think the European problems will be well-tackled and overcome over the next two to three years,” Dow Jones quoted Regling as saying during a talk at Beijing’s Tsinghua University.

“But it does not mean that all problems in this world will have disappeared,” the chief executive of the European Financial Stability Facility (EFSF) said.

Longer-term challenges include: a “big structure shift in financial markets” caused by the damaged appeal of sovereign debt among investors, and boosting competitiveness in some countries, Regling said.

“Sovereign debt, which for decades or centuries were the predominant risk-free asset, may be losing that status, not only in Europe but also in other countries,” he said.

Regling arrived in China a day after EU leaders announced measures including quadrupling the firepower of the fund to one trillion euros ($1.4 trillion) from 440 billion euros.

He said he was in China to “listen to potential investors” and “get their views” on the EU effort, calling the Friday talks “productive” and “friendly.”

On Friday, China said it would seek more clarity before investing in the bailout fund, dampening expectations that the world’s second-largest economy was prepared to help Europe overcome the crisis.

Expectations for a strong commitment from Beijing had been high ahead of Regling’s visit, with the Financial Times quoting a source saying China could inject more than $100 billion (70.5 billion euros).

But publicly, Beijing has been noncommittal and Chinese state media said Europe must take responsibility for the crisis and not rely on “good Samaritans” to save the continent from its fiscal woes.