BRUSSELS, Belgium – European socialists called yesterday for a eurozone economy rescue fund to be set up that would be financed by selling bonds at rates well below the premiums that Greece and others are currently paying to finance their debt.

The Party of European Socialists says this would protect the 16 nations that use the euro “against speculative attacks on sovereign debt and the single currency.”

The group — which includes the ruling parties of Greece, Spain and Britain — said that the European Investment Bank should establish a trustee fund to borrow on the markets “at a fair price” and pass on “fair financing for any eurozone member state facing speculative pressures.”

“The prime objective of the mechanism is to create conditions in which a sovereign default from any eurozone member state is clearly judged impossible by the markets,” it said.

It said this would allow Greece to borrow at “prices not artificially inflated by speculative attacks” and would not force another country to take on Greece’s debt.

The socialists are asking EU finance ministers to discuss the plan at a March 16 meeting. However, EU officials have talked down any plans for the eurozone to jointly issue bonds and reports point to other options, such as asking eurozone state-owned banks to buy Greek debt.

The European Investment Bank, a lender backed by EU governments, also said last month that it cannot bail out Greece or any other European country that can’t pay its debts and could “only finance economically viable projects.”

The EIB said its rules would not allow it cover a budget deficit or join a financial rescue. It has ¤75 billion (US$103 billion) to lend for infrastructure and economy projects, usually in poorer EU nations.

Markets have hiked the price of borrowing for Greece, Spain and Portugal as they press for details on how eurozone governments would react if one member of their currency union were not able to repay debt.

The high spreads on Greek bonds are already holding back new Greek bond issues as officials say they are waiting until market rates improve — something that might only happen if traders see good prospects of a bailout.

Greece needs to borrow ¤54 billion this year and has so far raised around ¤13 billion.

Traders expect Germany, the largest euro state, to lead any bailout. But German Chancellor Angela Merkel says no German taxpayer money would be used to bail out another country.

Eurozone nations pledged last month to rescue a member nearing bankruptcy to safeguard the stability of their shared currency. They did not say how.

The Greek government has said that it is not looking for a bailout and won’t need one as it makes harsh public spending cutbacks to bring down a budget deficit that was the EU’s highest at 12.7 per cent. The austerity program has triggered Greek strikes and protests.

The country is now under pressure to do more, as European Union officials warn that current cuts might not get the deficit down to 8 percent by the end of this year. Eurozone governments may order Athens to implement tougher measures at March 15-16 talks.