EU treaty to fix debt crisis fails

EU treaty to fix debt crisis fails - Europe - Al Jazeera English

Franco-German plans to get all 27 members to back EU treaty changes collapses as Britain rejects plans.
Last Modified: 09 Dec 2011 04:27


A bid to change the EU treaty to resolve the eurozone debt crisis foundered at a crunch summit in Brussels on Friday on a British refusal to sign up without major concessions in return.
The key item on the agenda was a Franco-German plan on a tighter fiscal controls with automatic penalties for eurozone nations that overspend.

Reports say Berlin and Paris failed to secure backing from all 27 EU members to change the bloc's treaties to proceed with reforms.
Any deal will now likely involve only the 17 eurozone members.

Al Jazeera's Tim Friend reporting from Brussels says "Its now pretty clear, they have been unable to reach a concensus amongst the 27 EU members, so they might now carve an agreement amongst the 17 nation eurozone members."

With the euro already down against the dollar and stocks hit hard from New York to Tokyo, Prime Minister Donald Tusk of current EU chair Poland had warned beforehand that failure to convince Britain to sign up would mean the "coffin" for a post WWII EU integration.

The summit in Brussels was undermined early on Thursday by a European Central Bank (ECB) warning that there will be no big boost in rescue funding.
On Thursday, leaders took tentative steps to implement a so-called "golden rule" asking countries to set balanced budgets until debt levels drop, although this was only agreed "in principle" with political wriggle room remaining, diplomats said.

Difficult talks running overnight began on a sour note when ECB president Mario Draghi, who joined pre-summit negotiations with a restricted power group of Germany, France and leading EU officials, sent stock markets falling.

Draghi said hoped-for ECB action to buy up the sovereign bonds of debt-wracked countries was "limited" and "temporary".

Over the past two years, bond traders have driven up borrowing costs for a succession of eurozone countries.

Markets have been looking to see how European Union leaders would come up with a promised trillion-euro emergency firewall to save Italy or Spain if sucked in like Greece and others beforehand.



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