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| Putin doubts EFSF and IMF can overcome euro crisis |
| Pozdnyakovo, 12.11.2011 |
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| Fri Nov 11, 2011
* Putin says Russia very worried about euro zone, Italy
* Calls for European Central Bank to help out
* Says euro zone needs $1.5 trillion to overcome crisis (Adds quotes, details, context)
By Gleb Bryanski
POZDNYAKOVO, Russia, Nov 11 (Reuters) - Russian Prime Minister Vladimir Putin expressed doubt on Friday that the European Financial Stability Facility and the IMF have enough resources to overcome the euro zone crisis and said the "collapse" of Italy would be a catastrophe that must be avoided.
"Our leading experts believe that without direct intervention from the ECB (European Central Bank) this problem cannot be solved. The EFSF, alone or cooperating with the IMF, does not have the necessary resources," Putin said at an annual meeting with Russia experts outside Moscow.
"I believe that the resources needed to overcome the crisis are about 1.5 trillion euros ($2 trillion)," said Putin, whose country holds the world's third largest foreign reserves.
He said Russia, half of whose trade is with the European Union, was very worried about the situation in the euro zone and about Italy's fate.
"There is no way that Italy should be allowed to collapse, this would be a catastrophe," he said.
Putin reiterated his call for the European Central Bank to backstop the EFSF.
"We are very much hoping that ECB will interfere directly, I do not think that it will lead to a catastrophic rise in inflation," Putin said.
"The choice there (in the eurozone) is not between good or bad but between bad and very bad," he said. "But it is better to move towards the bad than very bad."
The euro zone wants to leverage the 440-billion-euro EFSF by four or five times to prevent contagion spreading from crisis-hit Greece to Italy, whose borrowing costs are approaching levels seen as unsustainable.
But the currency union's largest economy, Germany, has ruled out using the ECB's balance sheet to pump up the EFSF's lending power to as much as 1 trillion euros ($1.4 trillion).
The euro zone has turned to major emerging economies, which together hold trillions of dollars in foreign reserves as a buffer against external shocks, to support the EFSF.
Russia has made clear it would prefer to channel any aid via the IMF.
Putin said nothing about potential Russian aid in his public remarks at a dinner with Russia experts at a French restaurant at a riding club outside Moscow late on Friday.
IMF head Christine Lagarde met President Dmitry Medvedev in Moscow on Monday, but no details emerged from their talks.
($1 = 0.728 Euros) (Reporting by Gleb Bryanski; Editing by Steve Gutterman)
Reuters
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