Europe summit: Merkel vs. everyone elseBRUSSELS (AP) — Economic growth was the mantra Thursday as European leaders gathered to sign off on measures to boost it around the continent. Yet expectations of a breakthrough on the explosive issue of pooling European debt have fallen by the wayside.
BRUSSELS (AP) — Economic growth was the mantra Thursday as European leaders gathered to sign off on measures to boost it around the continent. Yet expectations of a breakthrough on the explosive issue of pooling European debt have fallen by the wayside.
European Commissioner for Economic Affairs Olli Rehn told reporters he expected leaders would agree on new growth measures for Europe, as well as taking some kind of action to reduce borrowing rates for Spain and Italy, which are approaching unmanageable levels.
"I expect that there will be a decision on a further step toward rebuilding the economic and monetary union," he said shortly before the summit was to start. "We also need concrete decisions on a short term stabilization of financial markets, especially sovereign debt markets."
German Chancellor Angela Merkel, who has resolutely opposed the issuing of mutual debt — known as Eurobonds — is the woman to watch, fear or confront at the two-day summit.
Many leaders have backed the idea of eurobonds as a key way of fixing the eurozone's problems as they would help lower indebted countries' borrowing costs. But Merkel has been reluctant to expose her country to new potential costs, and is concerned that eurobonds may minimize the pressure on countries like Greece and Spain to reform their economies.
"I think we should stop talking about eurobonds now because, with the German government's 'no,' with this definitive 'no' from Mrs. Merkel, eurobonds are now a non-issue," the president of the European Parliament, Martin Schulz, said Thursday.
"I personally continue to see it as a good solution, a sensible one, but there is no sense in conducting theoretical debates when the house is on fire," Schulz told Germany's ZDF television.
Global stock markets mostly sank Thursday as European leaders prepared for the summit.
Markets and investors, who felt burned by past promises they saw as too weak to solve Europe's debt crisis, want a breakthrough this week to ensure the region's debt crisis doesn't engulf the world economy, but they aren't expecting one. Any breakthrough would hinge on Merkel, who brings the weight of the continent's biggest, strongest economy with her to the meeting in Brussels.
The France-sponsored plan to stimulate growth, and so increase government tax revenues, is relatively modest. Although worth €130 million ($162 million), it is expected to consist mostly of European funds already earmarked for development.
Far more urgent, in the short term, is finding a way to keep the cost of borrowing money sustainable for weaker EU countries.
The leaders of Italy, France and Spain are pressing Germany to agree to share debts before markets push the 17-nation eurozone any closer to collapse. The EU's top officials and the International Monetary Fund have argued the same.