Open

Coming up

Don't miss

Replay


LATEST SHOWS

MEDIAWATCH

Netanyahu deletes tweet featuring photo of James Foley

Read more

THE WORLD THIS WEEK

The World This Week - 22 August 2014 (part 2)

Read more

THE WORLD THIS WEEK

The World This Week - 22 August 2014

Read more

FRANCE IN FOCUS

FRANCE IN FOCUS

Read more

FOCUS

Lifting the veil over China's air pollution

Read more

ENCORE!

Tango Takeover in Paris

Read more

WEB NEWS

Calls for ISIS media blackout after execution of James Foley

Read more

IN THE PAPERS

'Steely resolve of reporters exploited by pared-down employers'

Read more

BUSINESS DAILY

US judge calls Argentina bond swap offer illegal

Read more

  • Europe launches navigation satellites to rival GPS

    Read more

  • Besieged by problems, Hollande faces unhappy return from summer holidays

    Read more

  • Iraqi Sunnis quit govt talks after mosque massacre

    Read more

  • US demands Russia withdraw aid convoy from Ukraine

    Read more

  • US rights group sues government over ‘deportation mill’

    Read more

  • PSG fall flat once more against Evian

    Read more

  • US National Guard starts to pull out of embattled Missouri town

    Read more

  • Fed Chair says US job market still hampered by Great Recession

    Read more

  • August 22, 1914: The bloodiest day in French military history

    Read more

  • Central African Republic announces coalition cabinet

    Read more

  • Hamas publicly executes "informers"

    Read more

  • French firebrand leftist to quit party presidency, but not politics

    Read more

  • Fear of Ebola sky-high among Air France workers

    Read more

  • US says Islamic State threat 'beyond anything we've seen'

    Read more

  • Malaysia mourns as remains of MH17 victims arrive home

    Read more

  • Turkish Foreign Minister Davutoglu set to be Erdogan's new PM

    Read more

  • Interactive: Relive the Liberation of Paris in WWII

    Read more

Europe

Eurozone rescue plan in doubt ahead of key summit

Video by Luke BROWN

Text by News Wires

Latest update : 2011-10-26

European leaders faced intense pressure Wednesday to come up with a broad strategy to fix the eurozone’s mounting debt crisis amid growing signals that a deal would not be ready in time for a crucial Brussels summit.

AP - A grand plan to resolve Europe’s escalating debt crisis was once again in doubt after officials said Tuesday that key parts of the package may not be ready in time for a leaders’ summit on Wednesday.

A meeting of European Union finance ministers, which was to be held just before the summit, was called off. A summit of EU and eurozone leaders planned for Wednesday evening will still be held, but it was unclear whether the heads of state and government would be able to reach a detailed deal.

The euro and stocks on both sides of the Atlantic slid on the news amid fears that Europe would prove unable, after two years, to get a grip on its debt crisis.

The 17 eurozone countries have not reached final agreement on the details of two key elements of the plan - reducing Greece’s massive debts and boosting the firepower of the bailout fund, two European officials said. They spoke on condition of anonymity because the talks were confidential.

Because of that, the 10 EU countries that do not use they euro won’t sign off on a plan to force banks across the continent to raise billion of euros in capital and insisted the meeting of finance ministers be called off, the officials said.

One of the officials said that the eurozone was also still waiting for Italy to take concrete action to control its debts and kick start growth. “It’s a real mess once again,” the other official said. However, a third European official said he still expected leaders to reach concrete deals, including figures on how much of a cut private investors will have to take on their Greek bondholdings and how much firepower the bailout fund could get through leveraging.

The third official was also speaking on condition of anonymity.

The eurozone is locked into negotiations with banks and big investment funds to take losses of as much as 60 percent on their Greek bond holdings, but negotiators for the banks have indicated that they will not accept haircuts of that magnitude.

Forcing losses onto banks could trigger big payouts of credit insurance and cause huge turbulence in global markets, analysts warn. At the same time, two schemes to give the €440 billion ($612 billion) European Financial Stability Facility more firepower - by using it to guarantee bond issues from shaky countries like Italy and Spain - also still lack detail.

Some policymakers have doubts how effective the changes to the bailout fund will be at containing the crisis, and Guy Verhofstadt, the leader of the liberal faction in the European Parliament, warned that current ideas to give the EFSF more leverage could fail to convince the markets. But even if the technical difficulties of boosting the bailout fund can be worked out, rich eurozone countries remain reluctant to commit their money to insuring the debt of Italy until that country does its part to get its economy back on track.

Italian Prime Minister Silvio Berlusconi has promised his eurozone colleagues to detail concrete measures his government plans to take to boost growth and reduce its debt in time for the Wednesday summit. However, as of Tuesday afternoon, European Commission President Jose Manuel Barroso and EU Council President Herman Van Rompuy had not received the letter outlining the plans, a spokeswoman for Barroso said.

Berlusconi was struggling Tuesday to get his coalition partners to support new measures, such as raising the pension age, demanded by the eurozone. The leader of the far-right Northern League party warned that Berlusconi’s government might fall as part of the dispute, potentially heralding months of political limbo and threatening to destabilize the country.
 

Date created : 2011-10-25

  • ECONOMY

    Sarkozy and Merkel set for crunch EU debt crisis talks

    Read more

COMMENT(S)