EU meet seeks 'powerful' deal
Source: Agencies |
December 8, 2011, Thursday
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THE leaders of France and Germany will not leave this week's EU summit until a "powerful" deal is reached to arrest the eurozone debt crisis, Paris said yesterday, as new figures exposed ever more severe stress among Europe's banks.
French President Nicolas Sarkozy and German Chancellor Angela Merkel will lay out a plan at tomorrow's European Union summit to impose mandatory penalties on euro states that exceed deficit targets, aiming to restore market trust and prevent the region's debt crisis spiraling out of control.
But while Paris voiced determination, a senior German official gave a deliberately downbeat assessment of prospects for a deal in an apparent effort to jolt partners into accepting Berlin's terms and restrictions.
"I have to say today ... that I am more pessimistic than last week about reaching an overall deal ... A lot of protagonists still have not understood how serious the situation is," the official told a pre-summit briefing.
"My pessimism stems from the overall picture that I see at this point, in which institutions and member states will have to move on many points to make possible the new treaty rules that we are aiming for," he said, speaking on condition of anonymity.
United States Treasury Secretary Timothy Geithner, on a tour of Europe to lobby for action, voiced confidence in the Franco-German plan to overhaul the EU treaty to anchor tighter budget discipline.
"I have a lot of confidence in what the president of France and the minister are doing, working with Germany to build a stronger Europe," Geithner told reporters after talks with French Finance Minister Francois Baroin.
Baroin told Canal+ television: "Neither Nicolas Sarkozy nor Angela Merkel will leave the negotiating table of this summit until there is a powerful deal."
Figures released yesterday showed just how urgently some European banks need help.
Italian banks had to borrow 153.2 billion euros (US$205 billion) in emergency liquidity from the European Central Bank in November, up from 111.3 billion euros at the end of October, Bank of Italy data showed, another big leap in reliance on the central bank which has almost quadrupled since June, when Italian lenders took 41.3 billion euros.
Eurozone banks took more than US$50 billion in the ECB's first dollar funding operation since the world's leading central banks agreed last week to cut their cost, five times the US$10 billion forecast in a Reuters poll of money market traders.
Germany may reactivate its bank rescue fund at next week's Cabinet meeting, a government official said.
The ECB's governing council holds a crucial meeting today, before the EU summit.
French President Nicolas Sarkozy and German Chancellor Angela Merkel will lay out a plan at tomorrow's European Union summit to impose mandatory penalties on euro states that exceed deficit targets, aiming to restore market trust and prevent the region's debt crisis spiraling out of control.
But while Paris voiced determination, a senior German official gave a deliberately downbeat assessment of prospects for a deal in an apparent effort to jolt partners into accepting Berlin's terms and restrictions.
"I have to say today ... that I am more pessimistic than last week about reaching an overall deal ... A lot of protagonists still have not understood how serious the situation is," the official told a pre-summit briefing.
"My pessimism stems from the overall picture that I see at this point, in which institutions and member states will have to move on many points to make possible the new treaty rules that we are aiming for," he said, speaking on condition of anonymity.
United States Treasury Secretary Timothy Geithner, on a tour of Europe to lobby for action, voiced confidence in the Franco-German plan to overhaul the EU treaty to anchor tighter budget discipline.
"I have a lot of confidence in what the president of France and the minister are doing, working with Germany to build a stronger Europe," Geithner told reporters after talks with French Finance Minister Francois Baroin.
Baroin told Canal+ television: "Neither Nicolas Sarkozy nor Angela Merkel will leave the negotiating table of this summit until there is a powerful deal."
Figures released yesterday showed just how urgently some European banks need help.
Italian banks had to borrow 153.2 billion euros (US$205 billion) in emergency liquidity from the European Central Bank in November, up from 111.3 billion euros at the end of October, Bank of Italy data showed, another big leap in reliance on the central bank which has almost quadrupled since June, when Italian lenders took 41.3 billion euros.
Eurozone banks took more than US$50 billion in the ECB's first dollar funding operation since the world's leading central banks agreed last week to cut their cost, five times the US$10 billion forecast in a Reuters poll of money market traders.
Germany may reactivate its bank rescue fund at next week's Cabinet meeting, a government official said.
The ECB's governing council holds a crucial meeting today, before the EU summit.
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