Eurozone bailout chief: EU, Gulf countries enjoy strong relations

By Nawab Khan

BRUSSELS, May 29 (KUNA) — The managing director of the European Stability Mechanism (ESM) Klaus Regling begins a three-day visit to the Gulf region on Monday, his second in 18 months, to seek more investments for the bailout fund of the Eurozone countries.
“We are looking for investors, and have good relations with many investors in the Gulf region. We need these investors even though the Euro area crisis is coming to an end,” he told KUNA in an exclusive interview on Sunday.
“We need to refinance our outstanding claims on countries that needed our financial assistance during the last six years, and we do have one country that still receives more money from the ESM, Greece,” said the head of ESM, regarded as the European version of the International Monetary Fund (IMF).
Moreover, Regling said the amount of outstanding claims from countries that borrow from ESM is growing.”These loans have very long maturities, so we have to refinance them on a regular basis for many years to come and we will continue to issue bonds of 30 to 50 billion Euro per year, which explains why we need good relations with the investment community,” said the humble 65-year old German economist.
Regling did not reveal which Gulf Cooperation Council (GCC) nations he intends on visiting, nor the amount of Gulf investments in the ESM, but he noted that half of the investors come from Europe and other nations around the world, including the Gulf.
Since his last visit to the Gulf region in November 2014, the head of the EUآ’s most important financial institution said things have become a bit more difficult because oil prices have fallen to unprecedented levels.
However, he pointed out that Gulf countries have accumulated substantial financial buffers, so it is possible to draw on these buffers, “which of course is very helpful to cushion the adjustment.” “Many observers believe that the oil price in the medium term will go up somewhat,” he said, adding that there are certain fundamental factors that indicate that rising prices in the medium term are realistic.
Regling commended some activities going on in the Gulf region, aimed to curb energy dependence, noting the recent announcement by Saudi Arabia of its” vision 2020″. “I think it is a very healthy development because it has been proven that dependence on one commodity can have significant implications on the standard of living and the budget,” he said.
The ESM chief stressed that ” relations between Gulf countries and the EU are very strong, we see that in the trade numbers in both directions, as foreign direct investment continues to flow.” “As a result of low oil prices, this may decline a little bit, but I am not worried about that because the relations have been very strong and investment in Gulf countries may slightly suffer, but they remain very strong,” he told KUNA.
The ESM is the crisis resolution mechanism for the 19-member Euro area and is based in Luxembourg, having been in operation since October 2012. It aims to provide stability and support through a number of financial measures designed to prop up the eurozone member states, who are coping with financial problems.
The ESM’s authorised capital stock is 704 billion Euro and it has a paid-in capital of over 80 billion Euro, the highest of any international financial institution worldwide.
Regling has worked for 40 years as an economist in senior positions in Europe, Asia and the United States, including a lenghty tenure in the IMF in Washington and Jakarta. He also worked for a decade with the German Ministry of Finance, and was Director General for Economic and Financial Affairs of the European Commission for seven years. (end) nk.nam

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