EU, on shaky ground, holds summit

Dec. 16, 2010 at 12:19 PM
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BRUSSELS, Dec. 16 (UPI) -- Diplomats in Europe said the key to the summit meeting in Belgium is to limit distractions and focus on shoring up investor confidence.

The EUobserver quoted one diplomatic source as saying, "We are hoping the prime ministers will not add any decoration" to brief changes in the Lisbon Treaty that will allow the European Union to set up a long-term fund for financial stability.

"There must be no surprises," the official said. "There is just one objective: Calm down the markets."

The summit, which was to begin Thursday, is expected to include a disagreement on initiation of eurozone bonds. Prime Minister Jean-Claude Juncker of Luxembourg has proposed issuing regional bonds and has backing from Italy. But Germany and France oppose the measure, fearing their strong credit ratings would suffer if they were linked to weaker economies.

A second contentious point revolves around an increase to the current $750 billion EU fund to assist debt-burdened countries.

Belgian Finance Minister Didier Reynders has proposed doubling the fund, which is temporary.

Finance ministers fear investor confidence in Portugal, Spain and Belgium could erode quickly, causing these countries to require an international bailout.

Credit rating agency Standard & Poor's Tuesday downgraded its outlook for Belgian debt. Moody's Investor Service has warned that Spain, as well, could see its credit rating reduced.

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