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E.U. Leaders Hold 'Mini-Summit' On Debt Crisis

May 23, 2012
Originally published on May 23, 2012 6:22 pm
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From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.


And I'm Audie Cornish.

This evening in Brussels, a dinner that was sure to cause some heartburn. European leaders met behind closed doors to talk about the region's worsening debt crisis. The heads of all 27 EU nations talked jobs, growth, and how to help troubled banks and the indebted Greek economy.

NPR's Eric Westervelt has our story.

ERIC WESTERVELT, BYLINE: Tonight's meeting comes as German Chancellor Angela Merkel, who's a pushed a cut-your-budget-first agenda, is under increasing pressure at home and from fellow EU leaders to pull back on the pace of austerity and embrace new ideas for growth. The meeting also comes amid renewed talk that Greece could be forced to exit the euro, fueling doubts about the future of the currency union.

There are signs that too much belt-tightening too fast has only made matters worse in indebted eurozone countries. The new French president, Francois Hollande, has already altered the European debate to focus more on growth ideas, including a suggestion eurozone countries pool their resources to make more cash available for growth initiatives. He's also revived the idea of collectivizing debt through jointly issued bonds, so-called eurobonds.

While there are signs Chancellor Merkel may bend more on growth ideas, it appears eurobonds are still a red line for her government. Germany's leading opposition parties, the Social Democrats and the Greens, are emboldened by Hollande's victory and the changed debated.

Volker Beck, the Green Party's chief federal whip, says the opposition will increase its push for eurobonds and will them to parliamentary support for Merkel's debt-limiting fiscal pact.

VOLKER BECK: We would endorse the proposal of eurobonds. The French administration, as well as the German opposition, are endorsing it. And we will only sign the fiscal pact if there will be also concessions on other issues like eurobonds and investment program for the states who have too much debt.

WESTERVELT: Meantime, Germany's powerful central bank warned today that if Greece left the eurozone, the challenges to Germany would be huge but, quote, "manageable given prudent crisis management." Yet, the Bundesbank called the Greek crisis extremely worrying and warned Athens that it would have to bear the consequences if it failed to make good on agreed-to austerity measures. The bank also cautioned strongly against loosening the terms of Greece's bailouts. That would damage confidence in the eurozone, the bank said, and weaken incentives for reform and budget cutting.

Eric Westervelt, NPR News, Berlin. Transcript provided by NPR, Copyright NPR.