European Leaders Grapple With Eurozone Rescue
Originally published on Thu June 28, 2012 10:34 am
LINDA WERTHEIMER, HOST:
It's MORNING EDITION from NPR News. I'm Linda Wertheimer.
RENEE MONTAGNE, HOST:
And I'm Renee Montagne. And with us in the studio is White House correspondent, Ari Shapiro. We are awaiting to - we are awaiting the Supreme Court's ruling, which actually has come out. It's much anticipated - the ruling on the constitutionality of the sweeping health care law. We are parsing that ruling over the next few minutes and we will have much more on it as it is fully released, exploring the legal, political, and economic questions likely to arise, again, in the next few minutes. But first.
WERTHEIMER: Meanwhile, European leaders are meeting today in Brussels for their latest summit, aimed at saving the eurozone from financial meltdown. The top-level meeting pits German Chancellor Angela Merkel against her increasingly unified partners - France, Italy and Spain - which are determined to win concessions from Europe's economic powerhouse.
NPR's Sylvia Poggioli joins us on the line, to discuss the issues European leaders will be considering in Brussels. Sylvia, good morning.
SYLVIA POGGIOLI, BYLINE: Good morning, Linda.
WERTHEIMER: On the eve of today's meeting, the presidents of the two largest countries in the EU met in Paris. German Chancellor Merkel and French president François Hollande have very different views on what to do. Did they reach any agreement?
POGGIOLI: There was no breakthrough. Merkel said yes to a growth package wanted by Hollande, but that it already been agreed to at last week's pre-summit in Rome. They remained at odds over how to stop the spiraling debt crisis. In escalating tough statements, Merkel this week rejected any form of pooling debt of eurozone members, to the point where she said the creation of common euro bonds will not happen as long as she is alive.
She also considers a draft proposal to be presented at the summit by top EU officials, for greater economic and political union - just too weak on fiscal responsibility. So there's likely to be a tense confrontation and the summit might go into overtime through the weekend.
WERTHEIMER: Now, even if Germany is outvoted by its closest partners, it still holds the purse strings in the eurozone. So what does Germany want?
POGGIOLI: Well, Merkel insists that if Germany is to share financial risk with its EU partners, their governments must yield more control over their budgets and economic policies to EU institutions first. Germany has not put forth any proposals for immediate moves to ease the crisis. And this has alarmed the leaders of France, Italy and Spain. The last two are seeing their borrowing costs spiral to unsustainable levels.
The three countries are acting more and more as one. All of a sudden we see Rome and Madrid elbowing their way into the traditional French-German axis that, you know, have led Europe for decades.
WERTHEIMER: So, what do France, Italy, and Spain want?
POGGIOLI: Well, first of all, they want a shift in focus away from German-dictated austerity; that's already causing political and social instability in southern Europe. They want more growth. Most urgently, Italy and Spain want the EU rescue funds or the European Central Bank to be allowed to intervene to stabilize financial markets, by buying their bonds and lowering their borrowing costs.
Spanish Prime Minister Mariano Rajoy sounded desperate when he said, we can't continue for a long time to finance ourselves with these prices. And he has strong support from Italy's Mario Monti, who's leading the charge against Germany. Monti has warned this is the week to save the eurozone. He wants results and says he will not rubber stamp of a vague closing statement.
He said that Italians have made great sacrifices to get their deficit under control and warned that if they become discouraged, it could unleash an anti-EU backlash that would be a disaster for the whole European Union.
WERTHEIMER: Sylvia, until just recently, it seemed that Greece is the center of this crisis. Now, it's as if the subject has shifted.
POGGIOLI: Yes, it's now shifting from countries in need of financial assistance to how to shape what some are calling the new euro. The European Central Bank President, Mario Draghi, has said that the single currency, as it is today, is unsustainable. And he called on EU leaders to come up with a vision of what the euro should look like some years from now.
But it's going to be much harder. There's none of the enthusiasm of the late 1980s. The Germany of the time was much more insecure and dependent on its EU partners than it is today. And the mood in Europe is very bleak; there's a lot of populism and a wave of anti-EU nationalism.
WERTHEIMER: That's NPR's Sylvia Poggioli in Rome. Sylvia, thank you.
POGGIOLI: Thank you, Linda. Transcript provided by NPR, Copyright NPR.