With the euro under siege, European Union leaders will gather Thursday for a meeting aimed at restoring confidence in their monetary union, but threatened by one of Europe’s persistent failings: its inability to speak with one voice, the International Herald Tribune reported.
Despite eve-of-summit-meeting pleas for harmony and discipline — and a warning Wednesday from the ratings agency Moody’s that Spain’s credit rating could be downgraded — the divergent views being voiced Wednesday by E.U. leaders offered anything but clear signals.
Chancellor Angela Merkel of Germany flatly rejected the idea of common bonds for the euro zone, though Jean-Claude Juncker of Luxembourg, who heads the group of finance ministers of the 16 nations in the euro zone, said he still planned to raise the subject at the meeting if permitted.
Meanwhile, Didier Reynders, the Belgian finance minister, was quoted by the newspaper La Libre Belgique that he favored a doubling of the current €440 billion, or $583 billion, rescue facility set up this spring by the European Union and the International Monetary Fund. Germany so far has rejected the idea of increasing the fund.
Neither issue is officially on the agenda for the two-day meeting. Instead, E.U. leaders are expected to agree to a small change to the Lisbon Treaty, which was adopted to strengthen the bloc, to create a permanent bailout fund for the currency after 2013. Officials say that they believe that this will not require referendums in any E.U. nation.
But the debate on a host of wider issues highlights the bloc’s difficulty in managing the euro-zone debt crisis while simultaneously framing longer-term policy.
The president of the European Commission, José Manuel Barroso, called on the leaders Wednesday to maintain discipline and show “that the E.U. is in control of events.”
“What we don’t need,” he added in a speech to European Parliament members, “is a beauty contest between leaders, a cacophony of diverging scenarios, or announcements that are not followed by action.”
Despite the pleas to present a united front, the markets are expected to put further pressure on borrowing costs in Portugal and Spain, two euro countries perceived as weak, once trading resumes at a more normal volume after the long holiday period.
European officials say they expect the leaders to agree to create a permanent support fund for the euro, while leaving open important questions on its size and scope until their meeting next spring.
Finance ministers promised last month to establish a permanent rescue fund, under which private lenders could be required to share in the losses of any sovereign debt restructuring after 2013, on a case-by-case basis.
Even reaching an agreement on this new mechanism, however, requires negotiation. Germany has pressed for a declaration that it could be used only if all nations agree and as a last resort — a formulation that is useful for German domestic politics but one that several countries fear would cause market uncertainty. Read more.
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