Debt crisis harries EU summit
Falling euro also pressing leaders
BRUSSELS — European leaders face a moment of truth at a summit today, as markets press them to come up with a financial safety net for Greece — with help from the International Monetary Fund — to stop the euro’s slide and keep debt crises from afflicting more eurozone countries.
The euro hit a 10-month low against the US dollar yesterday as leading credit ratings agency Fitch Ratings downgraded Portugal’s debt, turning up the volume on investor fears that Europe’s currency union has no way to shore up members with troubled economies.
EU Commission President Jose Manuel Barroso called on European governments to end dithering over what to do and agree on a detailed plan of financial help for Greece. He said their response at a two-day meeting would be a test of “their commitment to European and monetary union.’’
But Germany has blocked efforts by European nations to come up with a bailout program, saying Greece is not asking for help, is not on the verge of bankruptcy, and should turn to the IMF if it cannot borrow from markets. France and some EU officials were opposed to IMF involvement.
European diplomats said frantic negotiations yesterday might result in both France and Germany softening their views and finding a solution that includes the IMF and European Union sharing the burden of a financial rescue. Speaking on condition of anonymity, they said Spain’s Jose Luis Rodriguez Zapatero is heading efforts to get the 16 eurozone nations to meet separately today on the crisis surrounding Greece, along with the meeting by all 27 EU member governments.
Greece’s debt crisis has undermined the euro by showing that the rules supporting the currency have not prevented governments from overspending and running up large deficits. Athens’s woes have led to fears that other eurozone countries with troubled finances, such as Portugal and Spain, will also find themselves unable to borrow at acceptable costs.