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Europe

EU delays decision on ‘solidarity fund’ until mid-2014

© afp

Text by FRANCE 24

Latest update : 2012-12-15

European leaders meeting in Brussels delayed making a concrete decision on creating a eurozone "solidarity fund" until mid-2014 on Friday, a day after reaching a landmark deal on banking supervision and releasing new aid to Greece.

A decision on creating a "solidarity fund" to help struggling eurozone member states was put off to mid-2014 on Friday, dousing hopes of a radical overhaul a day after European leaders reached a landmark deal to supervise banks and shore up Greece.

After more than eight hours of late-night talks at a summit in Brussels, leaders promised to push ahead with setting up a mechanism to wind down problem banks, although it was unclear when the facility would be completed. They also launched tentative discussions on how to make countries stick to economic targets.

The leader of Europe's effective paymaster, German Chancellor Angela Merkel, only delivered verbal commitments, hinting that financial aid may be given to countries committing to reforms as part of moves towards greater economic co-ordination in the bloc.

"EU leaders don’t feel the urgency for moving forward on big institutional debates right now," said FRANCE24’s Brussels correspondent, Frederic Simon. "Big decisions of this kind will only take place after the European election in May 2014."

Back from the brink?

The two-day summit, the sixth and last of 2012, had only ever been intended to be a detailed discussion on how best to overhaul economic and monetary union and correct the problems that have fuelled three years of debt crisis.

The meeting was held just hours after EU finance ministers achieved a significant breakthrough in negotiations over a "banking union" by agreeing that the European Central Bank would be made the chief supervisor of eurozone banks.

That decision, and another by eurozone ministers to release up to 50 billion euros in new aid to Greece, marked two positive developments after a long year of crisis-management and took some of the pressure off leaders to make major strides.

In the eurozone alone, joblessness is heading towards the 20 million mark after a year of devastation and with recession set to last throughout much of 2013.

However, the sense of imminent panic on financial markets that dominated much of 2012 decision-making has receded significantly since the European Central Bank issued a long-resisted but near-unlimited guarantee in the summer to stand behind countries in financial difficulty. 

(FRANCE24 with wires)

Date created : 2012-12-14

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