Business

EU leaders discussing 'limited' changes to treaty

  • 23 October 2011
  • From the section Business
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Europe's leaders have agreed to change the EU treaty if necessary to help resolve the eurozone's debt crisis and stop the region sinking into recession.

EU president Herman Van Rompuy said after a day of emergency talks in Brussels that members would "explore the possibility of limited change".

UK Prime Minister David Cameron said he had sought assurances to protect Britain's interest if there is change.

Another meeting of all the EU countries will be held on Wednesday.

On Sunday morning the leaders of all the European Union's 27 members held talks about the Greek debt crisis, recapitalising banks, and bolstering the bailout fund.

This was followed in the afternoon by a separate meeting of the 17 nations that use the euro.

Speaking after the meeting, Mr Van Rompuy said that altering the treaty was under discussion. Although no proposed details were given, any change is likely to involve closer fiscal and economic cooperation.

"The aim is deepening our economic convergence and strengthening economic discipline," Mr Van Rompuy said.

He said the words 'limited change' meant "not a general overhaul of the institutional architecture. We also said that we would need the agreement of all the 27 (member states) before we can decide on a treaty change.

"The most important thing is not to change the treaty, the most important thing is to strengthen economic convergence," he said.

'Safeguard'

Mr Cameron said that he had secured safeguards to ensure that Britain's national interest within the EU was protected as the eurozone nations moved towards greater fiscal and economic integration.

He told a news conference: "This must not be at the expense of Britain's national interest. I have secured a commitment today that we must safeguard the interests of countries that want to stay outside the euro, particularly with respect to the integrity of the single market for all 27 countries of the EU."

The Prime Minister said the EU needed to build on the progress of the work done on Saturday on recapitalising the banks.

"More progress is needed," he said. "I think we are beginning to see the elements of a strong package coming together."

Mr Cameron has cancelled visits to Japan and New Zealand this week in order to attend Wednesday's summit of EU members.

Initially only the 17 countries that use the euro were to meet on Wednesday.

Speaking alongside German Chancellor Angela Merkel at a joint press conference on Sunday afternoon, French President Nicolas Sarkozy said "a quite broad agreement is taking shape on the reinforcement" of the EFSF bailout fund.

Mrs Merkel said a French idea for the fund to acquire a banking licence was dead, leaving a mix of plans to use the EFSF to offer insurance to eurozone bond holders, and moves to create a 'fund within the fund' that would be topped up by some of the main emerging nations.

There are also discussions with banks for them to accept a 50% write-off on Greek debt, in exchange for a new bailout by the EU and the International Monetary Fund.

All of the initial proposals reached over the weekend of talks need to be ratified by the 27 member at the full summit on Wednesday.

'Decisive and effective'

Before the start of Sunday's meetings, Greek Prime Minister George Papandreou urged Europe to "act decisively and effectively" to contain the troubles.

"It's been proven now that the crisis is not a Greek crisis," he told reporters. "The crisis is a European crisis. So now is the time that we as Europeans need to act decisively and effectively."

Shortly before the summit began, Italy's Prime Minister Silvio Berlusconi held private talks with EU President Herman Van Rompuy, Mrs Merkel, and French President Nicolas Sarkozy.

There is concern that budget cuts passed by the Italian parliament do not go far enough.

On Saturday eurozone finance ministers struck a provisional deal that will see banks raise more than 100bn euros (£87bn) in new capital to shield them against possible losses to indebted countries.

It is conditional on a wider accord, including a write-down of Greek debt.

BBC business editor Robert Peston said the 100bn euros agreed in the deal will be provided to banks by commercial investors, national governments and the EU's bailout fund.

Speaking after the 10-hour meeting on Saturday, Mr Osborne said: "Britain will keep up pressure in the next few days to a comprehensive package to resolve the European crisis and to make sure that we get jobs and growth."

Debt-laden Greece has been bailed out - twice - along with the Irish Republic and Portugal.

The eurozone is working on a third package for Greece, as well as a solution that could help the much bigger economies of Spain and Italy, which are faltering.

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