Eurozone ministers meet to build euro rescue plan
Wednesday, November 30, 2011
BRUSSELS (AP) — The 17 finance ministers of the countries that use the euro converged on EU headquarters Tuesday in a desperate bid to save their currency — and to protect Europe, the United States, Asia and the rest of the global economy from a debt-induced financial tsunami.
The ministers were discussing ideas that would have been taboo only recently, before things got as bad as they are: countries ceding fiscal sovereignty to a central authority; some kind of elite group of euro nations that would guarantee one another’s loans — but require strong fiscal discipline from anyone wanting membership.
German Chancellor Angela Merkel reiterated her support for changes to Europe’s current treaties in order to create a fiscal union, that will include binding and enforceable commitments by all euro countries.
“Our priority is to have the whole of the eurozone to be placed on a stronger treaty basis,” Merkel said Tuesday in Berlin. “This is what we have devoted all of our efforts to; this is what I’m concentrating on in all of the talks with my counterparts.”
Merkel acknowledged that changing the treaties — usually a lengthy procedure — won’t be easy because not all of the European Unions 27 member states “are enthusiastic about it.” But she dismissed reports the eurozone, or some nations within the bloc, might go ahead with a swifter treaty between governments.
Changes to existing eurozone rules are being touted as one way the eurozone can get out of its debt crisis, which has already forced bailouts of Greece, Ireland and Portugal, and is threatening to engulf bigger economies such as Italy, the eurozone’s third-largest. If Italy were to default on its debts of around $2.5 trillion, the fallout could spell ruin for the euro project itself and send shock waves throughout the global economy.
Even countries outside the eurozone were ratcheting up pressure on the ministers to find a solution. President Barack Obama, meeting with top EU officials on Monday, said a European failure to resolve its debt crisis would complicate his own efforts to create jobs in the U.S. And even Poland, historically wary of German dominance beyond its borders, appealed for help.
“I will probably be the first Polish foreign minister in history to say so, but here it is,” Radek Sikorski said in Berlin. “I fear German power less than I am beginning to fear German inactivity. You have become Europe’s indispensable nation.”
Illustrating the urgency is the fact eurozone governments have $852 billion in past debts coming due in 2012, of which 40 percent needs to be refinanced in the first four months of the year, according to a Barclays Capital estimate last week.
In a reminder of the urgency, Italy’s borrowing rates shot up Tuesday to rates above 7 percent, an unsustainable level on a par with rates that forced the others to seek bailouts. Markets rose generally for the second day on the expectation the enormous pressures on European ministers would produce results.
At the top of Tuesday’s agenda is finding a means to more fully integrate the eurozone’s disparate nations — ranging from powerful Germany to tiny Malta — both politically and financially. And the ministers must do it fast, without the delays caused by democratic niceties like referendums that have led many EU reforms to take years to implement.