BRUSSELS – Europe’s government-debt crisis, which has dragged on for more than two years, is entering a pivotal week, as leaders across the continent converge to prevent a collapse of the euro and a global financial panic that could result.
Expectations are rising that Friday’s summit of leaders of the 27 countries in the European Union will yield a breakthrough. An agreement on tighter integration of the 17 EU countries that use the euro – especially on budget matters – would be seen as a crucial first step. That could trigger further emergency aid from the European Central Bank, the International Monetary Fund or some combination, analysts say.
The coming days “will decide if the euro will survive or not,” Emma Marcegaglia, the head of Italy’s industrial lobby, Confindustria, said Sunday.
French President Nicolas Sarkozy, German Chancellor Angela Merkel, European Central Bank Chief Mario Draghi and even U.S. Treasury Secretary Timothy Geithner will star in a five-day financial drama leading up to the summit.
If the summit is a failure, Sarkozy warned last week, “the world will not wait for Europe.”
Sarkozy and Merkel meet today in Paris to unveil a proposal for closer political and economic ties between the 17 euro countries.
The two agree overall on the need for tougher, enforceable rules that would prevent governments from spending or borrowing too much – and on certain penalties for persistent violators.
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