TAOISEACH ENDA KENNY travels to Brussels today for an EU leaders summit, but the prospect of developing a grand plan to tackle the eurozone debt crisis appears in doubt.
European leaders have agreed the broad strokes of the measures necessary to contain the Greek crisis and guard against future uncertainties. These include boosting the power of the European Financial Stability Fund and writing down some Greek debt.
However, tensions remain between national governments on the details after a previous meeting on Sunday – at which it was hoped that the plan could be finalised today. Points of contention include the extent of the debt write-down, and the mechanism by which the EFSF can be strengthened.
Dutch finance minister Jan Kees de Jager said yesterday that the summit may not reach final agreement and had been unduly hyped as decisive, CNBC reports. A meeting of EU finance ministers was called off this morning, apparently to give officials more time.
Italy is seen as a key problem to address. The government of Silvio Berlusconi was publicly dressed down at Sunday’s talks, with German chancellor Angela Merkel calling on Italy to “live up to its responsibilities” by implementing tougher austerity measures.
Berlusconi’s government yesterday said it had reached a deal on controversial reforms, but it is not clear whether these will be accepted by EU leaders. The BBC reports that his coalition partner Umberto Bossi said “In the end we have found a way. Now we will see what the EU say.”
Analysts’s hopes were muted on the potential for a comprehensive deal yesterday. Former IMF official Domenico Lombardi told Bloomberg: “Europe is finally moving in the right direction but there is a sense that the remedies will fall short of the shock and awe response that is required to stabilize market expectations”.
- Additional reporting by Susan Ryan
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