The European Union on Tuesday delayed planned talks among leaders later this week on increasing the currency area's financial firewall against debt contagion. The thorny question of beefing up eurozone financial defenses was meant to have been dealt with over lunch on Friday, the second day of a summit gathering leaders of the 27 EU states in Brussels. However, a senior official told AFP that the session had been cancelled amid uncertainty over Germany's willingness to raise its contribution and after G20 countries delayed a final decision on a related IMF funding increase until April. The source said a special summit of the 17 euro currency partners could be held instead within the next four weeks or so. "Don't rule out a (eurozone) meeting before March ends,» he said. Eurozone finance ministers open two days of talks at EU headquarters with a discussion on Greece on Thursday afternoon. The Eurogroup has to check whether Greece has met a string of conditions for a second bailout worth 237 billion euros ($310 billion), by a February 29 deadline.
At G20 talks in Mexico at the weekend on loans to increase International Monetary Fund resources given the euro debt crisis, finance ministers and central bankers said the eurozone had to put in place a bigger firewall before other countries would help. EU leaders are to debate whether to combine their current firewall, the EFSF, with a permanent pot due to come into effect in July. This would give the debt-wracked 17-nation zone a total fund of some 750 billion euros ($1 trillion).
"We said we would examine the question in March,» a separate diplomatic source also told AFP. "We have to decide quickly,» he said, also suggesting a special summit for the currency area would be held in March. Eurozone countries themselves have already promised 150 billion euros to the IMF in the hope of reassuring the markets they have the resources to tackle a re-emergence of the crisis. But countries outside the zone, including the United States, Britain, Japan and China insisted at the G20 meeting that the eurozone do more.
German Finance Minister Wolfgang Schauble made no bones of Berlin's opposition to pouring in more cash to the pot, saying it «didn't make any economic sense." Nevertheless, he also noted that a decision in March would be «timely» given a planned IMF discussion on more resources. Senior figures at the IMF have tentatively scheduled March 13 for their talks on the issue, but delays on both sides of the equation raise the prospect of the debate dragging on. At this week's summit EU President Herman Van Rompuy is still expected to be elected to chair formal bi-annual eurozone summits.
"We are still going to designate a eurozone president at the level of the leaders,» the EU source underlined. Van Rompuy is also set to be returned for a new 30-month mandate as full EU president. Leaders are to sign on Friday morning a new treaty on fiscal stability agreed by 25 EU states, minus the Czech Republic and the United Kingdom.
Meanwhile, a governmental source in Athens said Greek Prime Minister Lucas Papademos will arrive in Brussels on Wednesday for the talks. He is to start a day early with a meeting with European Commission chiefs to discuss ways to re-direct nearly 8.0 billion euros ($11 billion) of EU grants allocated to Athens between now and 2013. [AFP]