Europe races to meet ‘Mad March’ debt deadline

BRUSSELS, February 27 (AFP): European leaders get back to the pressing business of trying to fix the eurozone debt crisis with a hectic series of summits counting down to a March 25 deadline. Governments know they have their work cut out to satisfy expectant markets, with the heat still on over fears for Portugal and Greece, a country that wants its existing bailout renegotiated.
Final decisions are due to be reached on the size, shape and scope of a permanent financial rescue system being set up for January 1, 2013. A temporary fund, already tapped by Ireland in December, offers little room for manoeuvre if Portugal needs help in the short term.
Eurozone paymaster Germany won't guarantee its backing unless Berlin wins concessions on how other nations govern their finances first. Germany, supported by France, wants to reform everything from pensions to business taxation across the 17-nation eurozone in particular.
"We need to see a clear message from European authorities to be sure that the crisis is behind us," said analysts from Dexia this week. The sluggish pace of decision-making has already been criticized by a host of ministers, including Portugal's Fernando Teixeira dos Santos.
Analysts from the Bruegel Institute in Brussels also say the EU has "lost too much time, allowed confidence to ebb away (and) destroyed its credibility" in the absence of an "aggressive" plan to push away market vultures. Next Friday, leaders from the right of EU politics gather in Helsinki to plot their negotiating strategy - as leaders from the left, including the under-pressure Portugal, meet in Athens.
They are preparing a special summit of eurozone leaders on March 11, which leads, following more meetings of finance ministers, to a full summit of EU leaders on March 24-25. Internal documents shared among EU ambassadors show that the prospect of a powerful deal is slim.
Of 11 major issues dividing member states, only one had been resolved by the time ministers last met in the middle of February. If they can't even agree on how to calculate debt, as these papers seen by AFP show, how can they convince speculators on markets that they can fix their problems long term?
Here Italy and Greece are miles apart from the rest, with Italy firmly opposed to "faster adjustment." Already, we are looking at a "transitional period of three years" being introduced.
Slovakia, Slovenia and Romania are massively opposed to agreement elsewhere "that fines and interest collected shall be transferred" into the rescue funds. More strictly enforced new rules being developed also include peer review of national budgets before they are passed by parliaments.
Non-euro Britain, of course, "repeated its opposition to the legal form" of the budgetary peer review requirement. Spain meanwhile refuses to provide monthly state expenditure figures to European partners.
At the nano-level, there is also a furious dispute between France (plus the Czechs and Denmark) on the one hand, and Germany (with Italy) on the other, on how binding to make a benchmark "scoreboard" of macroeconomic imbalances. These would measure things like export strength, unemployment, the size of the public sector etc. There is already "differentiation between eurozone and non-euro" states but "two member states requested further differentiation within the euro area to take into account converging economies," according to these files.
That refers to France and Germany's demands for a "competitiveness pact" which would impose the most successful German economic policies on partners, and raises the prospect of the debt-laden Mediterranean south being classed differently from the north, where good housekeeping is seen as a cultural necessity. According to centre-right Slovakia Prime Minister Iveta Radicova, economic policy harmonisation "has its limits," although others such as Estonia, the eurozone's newest member, back the plans. Leaders have a lot of work to do just to "reduce the open issues," the papers conclude.