Greek Debt Deal Merely Buys Time: World Bank's Zoellick

The latest Greek bailout totaling 130 billion euros would merely buy time, outgoing World Bank President Robert Zoellick said in an interview in Singapore with Reuters.

JHSB | ChinaFotoPress | Getty Images"It's too early to know, partly it depends on the actions the Greeks have to take," he said. "I think that the European Union has dealt with Greece as one element but the core elements are really going to be the success of some of the bigger countries, such as Italy and Spain."

But he said bailouts weren't necessary for these two countries or Portugal.

"Each country's situation is different and you really have three interconnected problems. For some it's the size of the sovereign debt, for some it's the effect on the banking industry, and for some it's their competitiveness," he said adding that "Spain and Italy need time to make the reforms."

"But I do think that all this is harder to accomplish when there is a recession in Europe."

Support from other European nations was also crucial.

"What I've tried to suggest, given the politics of reform in some of the Mediterranean countries, (is that) it will be important for Germany and other leaders in the process to show some prospects if the reforms are taken and how they will be supported by the other European countries."

Zoellick heads next to China for the release on Monday of a major economic report by the bank and a Chinese government think tank, looking at economic opportunities and challenges to the year 2030.

Global Economy, China and Oil

Zoellick said that prospects for global economic growth this year remain guardedly positive with much hinging on Europe stabilizing and China reaching a soft landing, with oil prices a wildcard.

"I have a cautious optimism about the international economy. Our forecasts are that growth might slow down a little bit this year. What I see is that the U.S. economy has got some momentum," he said.

"If Europe is able to continue to stabilize the situation, that's a big if, but that's an important part. And I think China has issues in the real estate sector but my own guess is they are on the process for a soft landing.

"The two big question marks to me are energy prices with the political risk and Europe being able to maintain things."

Brent crude futures settled near a 10-month high above $125 a barrel on Friday, posting a fifth straight weekly gain as heightened concerns over tensions with Iran about its nuclear program and cuts in supply sent oil prices up on both sides of the Atlantic.

The crude oil price spike has prompted speculation the International Energy Agency may again call for the release of oil stocks, or the U.S. may release strategic petroleum reserves.

Zoellick said oil prices remain a concern, though the World Bank is only an observer in any decision to release strategic oil stocks.

"Not my call," he said, adding that "I don't think one should rush into that but the reason that the strategic reserve was created was for use in emergency situations."

Copyright 2012 Thomson Reuters. Click for restrictions.

View the original article here