EU to hammer out debt crisis deal

Merkel and Sarkozy key players in Brussles; photo - EPA/Beniot Doppagne

“We're going to this summit to accept the package of anti-crisis measures to stabilize the situation in EU financial markets,” says Konrad Niklewicz, a spokesman for Poland's six-month EU presidency, which began on 1 July.

“This will primarily be a decision on recapitalizing European banks and strengthening the European Financial Stability Fund,” he added.

It is thought that the previous summit on Sunday in Brussels reached an agreement to boost the 440 billion Euro bailout fund, though whether this will be done by the European Central Bank or funds from individual nations is unclear.

German chancellor Angela Merkel will first have to get the plan agreed in the Berlin parliament before heading to Brussels, though there are major deferences with Paris on how to finance the deal.

The danger of Greece defaulting on loans spreading to other economies, such as Italy and Spain has put added pressure on EU leaders to finds a consensus.

EU presidency spokesman Konrad Niklewicz confirmed that a planned meeting of EU finance ministers – which would have preceded the summit, has been cancelled. Niklewicz said that work by the 27 finance ministers will now continue after the summit and will be based on what is agreed today.

Originally, only the 17 members of the Eurozone were to take part in the summit, but following pressure from other nations, particularly from Poland's Donald Tusk and the UK prime minister David Cameron, all 27 nations will now take part.

“From the perspective of the Polish EU presidency, the participation [today] of all EU member states guarantees their involvement in the decision-making process. This is our priority,” Niklewicz stressed.

Countries not currently using the single currency argue that certain elements of the rescue package, such as the capitalization of banks, is critical for the European banking system as a whole and concerns all of the EU, not just the Eurozone "17".

The Polish government has indicated that it still plans to enter the Eurozone and adopt the single currency when the time is right. Finance Minister Jacek Rostowski said on Sunday that during a period of renovation “it is not wise to enter a house full of builders”. (pg)