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EU 'faces its greatest challenge' - Jose Manuel Barroso EU 'faces its greatest challenge' - Jose Manuel Barroso
(40 minutes later)
The head of the European Commission has told Euro MPs that Greece will stay in the eurozone, but warned that the EU was facing its "greatest challenge".The head of the European Commission has told Euro MPs that Greece will stay in the eurozone, but warned that the EU was facing its "greatest challenge".
"Greece is, and Greece will remain, a member of the euro area," Jose Manuel Barroso said in his annual State of the Union address in Strasbourg. Appealing for patience over the Greek crisis in his annual State of the Union address in Strasbourg, he said: "This is not a sprint but a marathon."
Appealing for patience over the Greek economic crisis, he said: "This is not a sprint but a marathon." Proposing a financial transactions tax and eurobonds, he called for greater economic integration.
He called for greater EU economic integration, warning of fragmentation. International lenders are due in Athens to assess its progress on cutting debt.
Mr Barroso called for the creation of eurobonds and a financial transactions tax. The so-called troika, made up of the European Commission, European Central Bank (ECB) and International Monetary Fund (IMF), hold the key to releasing further bailout money the country badly needs.
Eurobonds 'natural step' Reports have emerged of a split among eurozone members about further support for Greece.
Citing "senior European officials", the Financial Times said a number of the bloc's 17 members wanted private investors to take a bigger hit in the proposed restructuring of Greece's debts.
'Emotional arguments'
Mr Barroso's comments about Greece remaining in the eurozone were met with applause.Mr Barroso's comments about Greece remaining in the eurozone were met with applause.
"Greece must implement its commitments in full and on time," Mr Barroso added."Greece must implement its commitments in full and on time," Mr Barroso added.
"In turn, the other euro area members have pledged to support Greece and each other.""In turn, the other euro area members have pledged to support Greece and each other."
Speaking about the scale of the crisis, the European Commission chief said: "We are today faced with the greatest challenge our union has known in all its history."Speaking about the scale of the crisis, the European Commission chief said: "We are today faced with the greatest challenge our union has known in all its history."
However, he argued, it was both "possible" and "necessary" to overcome it.However, he argued, it was both "possible" and "necessary" to overcome it.
Mr Barroso said eurobonds would be "advantageous" for the EU. He urged stronger EU central government, saying the alternative was "more fragmentation".
"I think this is going to be a baptism of fire for a whole generation," he added.
Commentators noted that Mr Barroso, who at one point quoted Nelson Mandela saying "it always seems impossible until it is done", had delivered an impassioned defence of the the EU and euro.
"Strong performance of Barroso in EP," tweeted Belgian EU official Rolf Falter (@rolfalter).
"At last some emotional arguments in the defence of European Union."
Eurobonds 'natural step'
On the financial transactions tax, Mr Barroso said the financial services sector must "make a contribution".
Eurobonds, he argued, would be "advantageous" for the EU.
"Once the euro area is fully equipped with the instruments necessary to ensure both integration and discipline, the issuance of joint debt will be seen as a natural and advantageous step for all," he said."Once the euro area is fully equipped with the instruments necessary to ensure both integration and discipline, the issuance of joint debt will be seen as a natural and advantageous step for all," he said.
On the financial transactions tax, he said the financial services sector must "make a contribution". Mr Barroso said monetary union should be completed by economic union, and the Commission would present plans in the coming weeks
"It was an illusion to think that we could have a common currency and a single market with national approaches to economic and budgetary policy," he said.
Discussions in Athens between the troika and Greek officials are expected to begin on Thursday.
The Commission, ECB and IMF officials will be deciding whether to release about 8bn euros ($11bn; £7bn) from a 110bn bailout package agreed last summer.
A key obstacle to the payment was removed on Tuesday when the Greek parliament passed a controversial new property tax bill, first announced earlier this month, that aims to boost revenues.
Anyone who does not pay the new tax risks having their power cut off.
The tax is one of a number of austerity measures Athens is introducing, measures that saw Greece's budget deficit fall by more than 5 percentage points in 2010, Greek Prime Minister George Papandreou said on Tuesday.
Speaking in Berlin, he said Greece would fulfil its obligations and hoped to be without a primary deficit from 2012.