Paul Taylor

BRUSSELS (Reuters) – A cloud of gloom hangs over Brussels ahead of yet another summit to thrash out yet another “comprehensive strategy” to tackle a sovereign debt crisis that Europe has failed for two years to stem, and that now threatens the world economy.

Gallows humour was rife among the grandees of European integration at the annual conference of the Friends of Europe think-tank on “the state of the union” last week.

“Hopefully next year we won’t be talking about Greek debt,” Etienne Davignon, 79, a Belgian former European Commissioner and patriarch of the European project, joked in his closing remarks.

“Either it will have gone or we will have gone.”

The opening session was billed as: “The EU’s three ages: rise, decline and fall?”

The question mark was the only concession to hope.

Weary cynicism surrounds next Sunday’s (October 23) summit of the 27 EU leaders, their sixth attempt this year to draw a line under the euro zone crisis that has led to bailouts of Greece, Ireland and Portugal and is now singeing Italy and Spain.

BRUSSELS (Reuters) – A cloud of gloom hangs over Brussels ahead of yet another summit to thrash out yet another “comprehensive strategy” to tackle a sovereign debt crisis that Europe has failed for two years to stem, and that now threatens the world economy.

Gallows humor was rife among the grandees of European integration at the annual conference of the Friends of Europe think-tank on “the state of the union” last week.

“Hopefully next year we won’t be talking about Greek debt,” Etienne Davignon, 79, a Belgian former European Commissioner and patriarch of the European project, joked in his closing remarks.

BERLIN/PARIS, Oct 7 (Reuters) – Germany and France are split
ahead of crucial summit talks on Sunday over how to strengthen
shaky European banks and fight financial market contagion to
prepare for a possible Greek default, diplomats said on Friday.

Under strong U.S. and market pressure, Chancellor Angela
Merkel and President Nicolas Sarkozy will try to bridge sharp
differences on how to use the euro zone’s financial firepower to
counter a sovereign debt crisis that threatens the global
economic recovery.

A German source said Paris wanted to tap the euro zone’s 440
billion rescue fund to recapitalise its own banks, which have
the largest exposure to peripheral euro zone debt, while Berlin
insisted the fund should be used only as a last resort when no
national funds are available.

PARIS/LONDON (Reuters) – It may look schizophrenic, but European governments are simultaneously contemplating making banks take a bigger write-down on Greek debt, taxing their financial transactions and boosting their capital base.

There are strong political reasons behind this seemingly contradictory approach: aiding banks with taxpayers’ money is political dynamite across Europe and needs to be handled with extreme care.

European leaders are walking a fine as they try to prevent a systemic banking crisis that could plunge the continent and the world back into recession, while avoiding political suicide by being seen to bail out the financial sector again.

PARIS/LONDON (Reuters) – It may look schizophrenic, but European governments are simultaneously contemplating making banks take a bigger write-down on Greek debt, taxing their financial transactions and boosting their capital base.

There are strong political reasons behind this seemingly contradictory approach: aiding banks with taxpayers’ money is political dynamite across Europe and needs to be handled with extreme care.

European leaders are walking a fine as they try to prevent a systemic banking crisis that could plunge the continent and the world back into recession, while avoiding political suicide by being seen to bail out the financial sector again.

PARIS (Reuters) – Just when Europe needs strong leadership to overcome its sovereign debt crisis, its pivotal leaders, Angela Merkel and Nicolas Sarkozy, have both been weakened at home.

The political fates of the German chancellor and the French president may hinge on their handling of the crisis that began in Greece and threatens to overwhelm the 17-nation euro area.

“If the euro fails, then Europe fails,” Merkel often says. She might add that she and Sarkozy would be likely to go down with the ship.

PARIS (Reuters) – Just when Europe needs strong leadership to overcome its sovereign debt crisis, its pivotal leaders, Angela Merkel and Nicolas Sarkozy, have both been weakened at home.

The political fates of the German chancellor and the French president may hinge on their handling of the crisis that began in Greece and threatens to overwhelm the 17-nation euro area.

“If the euro fails, then Europe fails,” Merkel often says. She might add that she and Sarkozy would be likely to go down with the ship.

PARIS (Reuters) – When European Commission President Jose Manuel Barroso began his annual State of the Union address by declaring that “we are facing the greatest challenge in the history of our union,” it was an understatement rather than hyperbole.

The sovereign debt crisis shaking the euro zone puts at risk the survival of the single currency and ultimately the wider 27-nation European Union with its single market, open borders and free movement of capital, goods and people.

“If we do not go for further integration, we risk fragmentation,” Barroso told the European Parliament. “We need to complete our monetary union with an economic union.”

PARIS (Reuters) – While European politicians battle over whether to issue common euro zone bonds to help resolve the currency area’s sovereign debt crisis, China could influence the outcome.

Europe is Beijing’s biggest export market and Chinese leaders have a declared interest in avoiding a financial meltdown in the European Union that could trigger a world recession.

They want to diversify their $3.2 trillion (2.03 trillion pounds) in foreign exchange reserves away from U.S. Treasury bonds and started long before Standard & Poor’s downgraded U.S. debt last month due to Washington’s political gridlock over reducing its deficit.

PARIS (Reuters) – While European politicians battle over whether to issue common euro zone bonds to help resolve the currency area’s sovereign debt crisis, China could influence the outcome.

Europe is Beijing’s biggest export market and Chinese leaders have a declared interest in avoiding a financial meltdown in the European Union that could trigger a world recession.

They want to diversify their $3.2 trillion in foreign exchange reserves away from U.S. Treasury bonds and started long before Standard & Poor’s downgraded U.S. debt last month due to Washington’s political gridlock over reducing its deficit.