This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.bbc.co.uk/go/rss/int/news/-/news/world-europe-16080530

The article has changed 14 times. There is an RSS feed of changes available.

Version 8 Version 9
France's Sarkozy warns Europe risks disintegration France's Sarkozy warns Europe risks disintegration
(about 1 hour later)
French President Nicolas Sarkozy has warned that "never has the risk of disintegration been greater" for Europe. French President Nicolas Sarkozy has warned that "never has the risk of disintegration been greater" for Europe in a speech in Marseille.
He was addressing a gathering of European leaders of the centre right in Marseille. He was addressing a gathering of European leaders of the centre right.
EU officials are preparing for a key summit in Brussels, where they will be trying to clinch a deal on how to tackle the eurozone debt crisis. German Chancellor Angela Merkel said it would take years to overcome the crisis but "we need to have more Europe".
The talks are described by analysts as "do-or-die" for the eurozone nations. EU leaders are preparing for a key summit in Brussels, where they will be trying to clinch a deal on how to tackle the eurozone debt crisis.
Mr Sarkozy of France has said that Europe is in much danger. Mr Sarkozy said Europe was in much danger.
"Never has Europe been so necessary. Never has it been in so much danger," he said."Never has Europe been so necessary. Never has it been in so much danger," he said.
"Never have so many countries wanted to join Europe. Never has the risk of a disintegration of Europe been so great. Europe is facing an extraordinarily dangerous situation.""Never have so many countries wanted to join Europe. Never has the risk of a disintegration of Europe been so great. Europe is facing an extraordinarily dangerous situation."
He said the eurozone economies still had a few weeks to decide, but that time was working against them.He said the eurozone economies still had a few weeks to decide, but that time was working against them.
The gathering in Marseille of the centre-right European People's Party is a chance to hear the concerns of smaller eurozone nations. On stage or in the corridors of the congress, they have signalled their resistance to key elements of the Franco-German proposal. One of them is Ireland, which is opposed to the idea of wholesale treaty change - that of course might trigger a referendum - and the line in the Franco-German proposal that would move Europe towards a single corporate tax rate.The gathering in Marseille of the centre-right European People's Party is a chance to hear the concerns of smaller eurozone nations. On stage or in the corridors of the congress, they have signalled their resistance to key elements of the Franco-German proposal. One of them is Ireland, which is opposed to the idea of wholesale treaty change - that of course might trigger a referendum - and the line in the Franco-German proposal that would move Europe towards a single corporate tax rate.
The Europe Minister for Ireland, Lucinda Creighton, said: "We have our red lines too. This is not a fait accompli just because two have found agreement."The Europe Minister for Ireland, Lucinda Creighton, said: "We have our red lines too. This is not a fait accompli just because two have found agreement."
There are other reservations among the Swedes, the Finns and the Czechs. Among the club of the smaller nations, there seems to be greater inclination towards Herman Van Rompuy's proposals of an amendment to the Lisbon Treaty - easier to agree, quicker and less messy for national parliaments.There are other reservations among the Swedes, the Finns and the Czechs. Among the club of the smaller nations, there seems to be greater inclination towards Herman Van Rompuy's proposals of an amendment to the Lisbon Treaty - easier to agree, quicker and less messy for national parliaments.
And so after the optimism that surrounded the Franco-German deal earlier in the week there are doubts emerging.And so after the optimism that surrounded the Franco-German deal earlier in the week there are doubts emerging.
"The diagnosis is that we have a few weeks to decide because time is working against us. If we aren't in agreement on this, I fear that we won't be able to agree on anything. That's the analysis.""The diagnosis is that we have a few weeks to decide because time is working against us. If we aren't in agreement on this, I fear that we won't be able to agree on anything. That's the analysis."
Mrs Merkel has said changes to the European constitution are necessary. She said all 27 member states in the European Union had a duty to Europe, and had to work together to overcome the crisis in the eurozone.
National egos and interests had to be put aside, she added.
Germany and France are pushing for new EU treaties, saying stricter fiscal rules should be enshrined there.Germany and France are pushing for new EU treaties, saying stricter fiscal rules should be enshrined there.
Meanwhile, the European Central Bank has cut its interest rates back to their historic low of 1%, as expected by financial markets. As the leaders were speaking, the European Central Bank cut its interest rates back to their historic low of 1%, as expected by financial markets.
Earlier, European Commission chief Jose Manuel Barroso, who is also in Marseille, urged EU to "do everything" to save the euro ahead of the Brussels summit.Earlier, European Commission chief Jose Manuel Barroso, who is also in Marseille, urged EU to "do everything" to save the euro ahead of the Brussels summit.
"The entire world is watching. We must do everything" to save the euro, he said, adding: "It is extremely important that we all together, all the EU, show that the euro is irreversible.""The entire world is watching. We must do everything" to save the euro, he said, adding: "It is extremely important that we all together, all the EU, show that the euro is irreversible."
Mr Barroso and Mr Sarkozy are attending the annual congress of the centre-right grouping in the European Parliament, the European People's Party (EPP), in the southern French city, along with German Chancellor Angela Merkel. The three leaders are attending the annual congress of the centre-right grouping in the European Parliament, the European People's Party (EPP), in the southern French city, along with Mrs Merkel.
The 10 non-eurozone members of the 27-member EU, including the UK, are concerned they may become isolated if the eurozone nations - driven by Berlin and Paris - decide to move to a new treaty on their own.
Ahead of the summit, all the signs are that it could be a bruising affair, the BBC's European affairs correspondent Chris Morris in Brussels reports.
US Treasury Secretary Timothy Geithner met new Italian Prime Minister Mario Monti in Rome earlier on Thursday to discuss ways of supporting the eurozone, and how international institutions like the IMF could assist the region "in this delicate phase", Mr Monti said in Rome.US Treasury Secretary Timothy Geithner met new Italian Prime Minister Mario Monti in Rome earlier on Thursday to discuss ways of supporting the eurozone, and how international institutions like the IMF could assist the region "in this delicate phase", Mr Monti said in Rome.
Mr Geithner said "the world can be encouraged by the progress made in the last few weeks" and that the US has a very strong interest in the success of the EU summit.Mr Geithner said "the world can be encouraged by the progress made in the last few weeks" and that the US has a very strong interest in the success of the EU summit.
This is the latest in a series of talks Mr Geithner is holding with eurozone leaders as US concern over the crisis deepens.This is the latest in a series of talks Mr Geithner is holding with eurozone leaders as US concern over the crisis deepens.
Merkel-Sarkozy letter Merkel-Sarkozy letter href="/news/special/business/11/economy_jargon/css/main.css?cachebuster=cb00000001" rel="stylesheet" type="text/css" /> Crisis jargon buster Use the dropdown for easy-to-understand explanations of key financial terms:
AAA-rating The best credit rating that can be given to a borrower's debts, indicating that the risk of borrowing defaulting is minuscule. href="/news/business-15060411">Glossary in full
The key proposal on the agenda of the gathering in the Belgian capital later on Thursday is how to enforce budgetary discipline with automatic penalties for those eurozone nations that overspend.The key proposal on the agenda of the gathering in the Belgian capital later on Thursday is how to enforce budgetary discipline with automatic penalties for those eurozone nations that overspend.
Mrs Merkel and Mr Sarkozy are seeking to enforce this by changing the existing EU treaties.Mrs Merkel and Mr Sarkozy are seeking to enforce this by changing the existing EU treaties.
"We are convinced that we need to act without delay," the two leaders wrote in a joint letter to European Council President Herman Van Rompuy, adding that the new treaty was needed by March."We are convinced that we need to act without delay," the two leaders wrote in a joint letter to European Council President Herman Van Rompuy, adding that the new treaty was needed by March.
Mr Van Rompuy is offering a plan which requires only amending the treaties.Mr Van Rompuy is offering a plan which requires only amending the treaties.
The Merkel-Sarkozy letter also called for "a renewed contract between the euro area member states".The Merkel-Sarkozy letter also called for "a renewed contract between the euro area member states".
The German-French plan is based on the following key provisions:The German-French plan is based on the following key provisions:
  • the European Commission to have the power to impose penalties for nations that run excessive budget deficits
  • all 17 eurozone nations should amend their national legislation to require balanced budgets
  • the eurozone countries to have common corporation and financial transaction taxes
  • any future bailouts would not require private investors to absorb part of the costs, as happened in the Greece case
  • the European Commission to have the power to impose penalties for nations that run excessive budget deficits
  • all 17 eurozone nations should amend their national legislation to require balanced budgets
  • the eurozone countries to have common corporation and financial transaction taxes
  • any future bailouts would not require private investors to absorb part of the costs, as happened in the Greece case
But an EU commissioner publicly derided the idea that sanctions alone could compel euro member states to abide by the rules.
"Automatic sanctions are a joke. Fiscal union needs collective, democratic decision-making that can respond to challenges & manage agg. [aggregate] demand," tweeted EU Social Affairs Commissioner Laszlo Andor.
He told the BBC that smaller EU states were disgruntled at the dominance of France and Germany in the decision-making process.
Mr Van Rompuy is offering a fast-track "fiscal compact" that does not need lengthy ratification by parliaments or national referendums.Mr Van Rompuy is offering a fast-track "fiscal compact" that does not need lengthy ratification by parliaments or national referendums.
In an interim report, the European Council president, who will be chairing the summit, argues that the necessary reforms can be adopted simply by amending a protocol - a procedure that needs national consensus but does not require substantial changes to the EU treaties. The 10 non-eurozone members of the 27-member EU, including the UK, are concerned they may become isolated if the eurozone nations - driven by Berlin and Paris - decide to move to a new treaty on their own.
This, Mr Van Rompuy argues, would speed up the implementation of reforms and remove any potential political complications.
However, a senior German official dismissed as a "trick" talk of introducing a fiscal agreement for the eurozone within existing treaties.
The official also admitted he was more pessimistic than a week ago about reaching a deal in Brussels.
British 'safeguards'
Paris and Berlin appear to be pushing through more radical measures, correspondents say, and if all 27 EU members cannot agree, then they are prepared to work towards a new treaty involving the eurozone bloc and any other country that wants to join.
Such a move could leave Britain - a non-eurozone EU member - feeling more isolated.
Crisis jargon buster Use the dropdown for easy-to-understand explanations of key financial terms:
AAA-rating The best credit rating that can be given to a borrower's debts, indicating that the risk of borrowing defaulting is minuscule. Glossary in full
UK Prime Minister David Cameron said on Wednesday that he would seek safeguards for London's powerful financial sector at the summit.
Mr Cameron argues that a financial transaction tax would work only if adopted globally.
Ahead of the summit, positions appear to be hardening, our correspondent says.
Such is the depth of the crisis surrounding the eurozone that the main focus is not on the EU solidarity but on restoring market confidence in whatever way proves possible, he adds. Earlier this week, Standard & Poor's put all eurozone nations on credit watch "with negative implications".
The ratings agency said the decision was prompted "by our belief that systemic stresses in the eurozone have risen in recent weeks to the extent that they now put downward pressure on the credit standing of the eurozone as a whole".