French President François Hollande says that the leaders of the 17 countries that use the euro are to hold an unplanned meeting in the middle of the night in Brussels, in a final push to get an agreement from the leaders to agree to devote €120 billion ($154 billion) for "immediate growth measures."
Hollande said early Friday the unplanned meeting would be to talk about emergency measures that might lower the borrowing rates of Italy and Spain.
Leaders of those two countries say their current borrowing rates are unsustainable. Both countries have refused to give their final approval to the proposed €120-billion stimulus plan, unless immediate measures are taken to help them.
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Hollande also said early Friday that discussions on the future deepening of Europe's economic and monetary union, as proposed by four senior EU officials, had been put off until October.
On Thursday, Herman Van Rompuy, president of the European Council, said that national leaders meeting in Brussels had agreed to the €120-billion stimulus plan.
Van Rompuy had said the 27 heads of state and government would continue their discussion of how to achieve financial stability into the evening.
Much the €120 billion is believed to be existing EU funds that are being repackaged. The amount is not large in terms of the size of the economy of the European Union.
Markets and investors, who felt burned in the past by promises they saw as too weak to solve Europe's debt crisis, want a breakthrough this week to ensure the region's debt crisis doesn't engulf the world economy, but they aren't expecting one.
Any breakthrough would hinge on German Chancellor Angela Merkel.
Merkel wants ambitious union
Merkel isn't likely to budge. She has argued repeatedly — and again Wednesday — that short-term solutions such as pooled debt or a more active European Central Bank are useless unless governments prove they can manage their budgets. She wants a grand, ambitious political union first.
And she brings the weight of the Continent's biggest, strongest economy with her to the meetings in Brussels.
While they may not be able to change Merkel's mind, other leaders who avoided confronting her in the past may not hold back this time.
Italy's Prime Minister Mario Monti, at risk of losing his job because of voter frustration with austerity measures, is increasingly outspoken.
Speaking in Brussels on Wednesday night, he said Italians have made great sacrifices and gotten their country's deficit under control. But yields on Italian debt soared to one-year highs anyway.
If Italians become discouraged that their efforts aren't helping, it could unleash "political forces which say 'let European integration, let the euro, let this or that large country go to hell,' which would be a disaster for the whole of the European Union," Monti said.
Monti said he's ready to work until Sunday night — instead of the scheduled Friday end of the summit — to ensure that leaders produce a growth package convincing enough to calm financial markets.
Most urgent issue is financing
Spain's prime minister is sounding especially desperate.
"The most urgent issue is financing," Mariano Rajoy said Wednesday. "We can't continue for a long time to finance ourselves with these prices; there are many institutions and financial entities that don't have access to financial markets."
Simon Tilford of the Center for Economic Reform said, "We're seeing the French, Italians and Spanish showing a greater readiness to act as one."
In the past, they were reluctant to isolate Merkel, he said. "But that flexible approach ... has delivered very little. They have grown alarmed and frustrated," he said. "If anyone is to lead the charge, it may be Monti, he is the one who has the most credibility on the European stage" — and the most to lose if pressure on Merkel fails.
While France has been the traditional partner — and counterweight — to Germany in European dealings in the past, Hollande is the least experienced head of state at the summit. He has just seven weeks of governing under his belt, and built his career as a consensus-builder instead of a confrontational rabble-rouser. And his country's economy is weaker, with growth forecast at just 0.4 per cent this year.
Hollande was grinning broadly Wednesday night at the one concession he has been able to wring from Merkel so far, an agreement to put growth on the European agenda alongside austerity measures.