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October 27, 2011

Europeans wait as leaders debate debt deal
Updated: 2011-10-27 07:26
By Fu Jing (China Daily)
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BRUSSELS – Europeans were waiting for a deal to tackle a worsening debt crisis on Wednesday after leaders held an one-hour work session.

The Justus Lipsius building, headquarters of the European Council in the heart of Brussels, has been thrust into the global spotlight as state and government heads gathered for the second time in less than three days.

After their previous summit on Sunday, when they agreed on basic elements of a comprehensive strategy, leaders gathered on Wednesday night to decide how to get out of the debt crisis and how to fiscally govern the European Union.

Despite the immense challenges, the streets around the European Council have been relatively quiet. The only thing out of the ordinary are the barricades set up to counter any demonstrations that may take place.

The EU cancelled its finance ministers meeting, known as an Ecofin, scheduled ahead of Wednesday night’s summit because the details of issues to be discussed at the meeting had not been finalized, sources told Reuters.

But eurozone financial officials were meeting ahead of the summit. And Ecofin may also meet in the coming days to work on the details of whatever eurozone leaders agree on Wednesday night.

“Ministers of finance may meet in the coming days to fine-tune decisions that will be taken tomorrow,” a spokesman for Herman Van Rompuy, the European Council president, said on Tuesday. “There is no new summit planned.”

By press time, the summit was still under way, and no details of the final comprehensive strategy were released.

Analysts said EU leaders weren’t likely to quantify the increased firepower of the European Financial Stability Fund (EFSF) at Wednesday night’s summit, and they may also not announce the amount of recapitalization for European banks, a person involved in the talks told the Wall Street Journal.

EU leaders were also to decide the scale of write-down on Greek debt. The range of a write-down under discussion is between 40 and 60 percent, with Germany at the high end and France at the low.

Meanwhile, EU leaders are awaiting a letter from Italian Prime Minister Silvio Berlusconi setting out details on further reform measures amid concerns the country could suffer a Greek-style debt meltdown if it doesn’t take swift action to control its debt.

As the G20 leaders are to meet on Nov 3 and 4 in France, EU leaders have been facing mounting pressures.

China hopes the EU takes effective measures to restore market confidence in tackling its debt crisis, the Foreign Ministry said on Wednesday, while also again defending the yuan’s exchange rate.

“I hope that the measures the EU adopts can effectively counter debt problems that some countries are facing and help in recovering market confidence and promote stability in Europe,” ministry spokeswoman Jiang Yu said.

Eveline Filon contributed to this story.

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