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    November 29, 2011

EU Finance Ministers Discuss Ways to Save the Euro

   Lisa Bryant | Paris
   From left, Greek Finance Minister Venizelos, French Finance Minister
   Baroin, Luxembourg's PM Juncker, German Finance Minister Schaeuble,
   European Commissioner for the Economy Olli Rehn, Italian PM and Finance
   Minister Mario Monti and Belgium's Finance Min
   Photo: AP
   From left, Greek Finance Minister Venizelos, French Finance Minister
   Baroin, Luxembourg's PM Juncker, German Finance Minister Schaeuble,
   European Commissioner for the Economy Olli Rehn, Italian PM and Finance
   Minister Mario Monti and Belgium's Finance Minister Didier Reynders
   share a word during a round table meeting of the eurogroup at the EU
   Council building in Brussels, November 29, 2011.

   Finance ministers from the 17-nation eurozone are holding another set
   of talks Tuesday and Wednesday on salvaging their common currency, amid
   more grim financial news.
   New governments in Greece and Italy, two of Europe's most financially
   troubled countries, have not been enough to reassure markets that the
   European Union has a handle on its sovereign debt and banking crisis.
   In new signs of doubt, Italian bond rates are soaring, last week,
   credit agencies lowered their ratings for Belgium, Portugal and
   Hungary. And lending among European banks is shrinking.
   As finance ministers meet in Brussels Tuesday and Wednesday, ideas are
   circulating for more radical fiscal changes. France and Germany want a
   stronger fiscal union among the 17 nations sharing the euro currency,
   with tougher budget commitments by member states. That idea was
   outlined by France's finance minister, Francois Baroin, on Tuesday.
   Speaking on French radio, Baroin said the European Union should have
   two objectives; restoring global confidence in the short term and more
   budgetary and fiscal integration in the longer term.
   EU finance ministers are also expected to discuss another option,
   eurobonds, essentially a way in which eurozone members guarantee each
   other's debts. But Germany, the most powerful EU member, opposes the
   idea.
   Berlin is also against another idea, reinforcing the powers of the
   European Central Bank, to make it a so-called lender of last resort for
   the region.
   The chief executive officer of the Brussels-based Center for European
   Policy Studies, Karel Lannoo, says even if EU nations can agree on some
   of these ideas, they will take time to implement.
   "There are short-term issues which have to be decided almost
   immediately, like preventing the contagion from the solution of Greece,
   writing off part of its debt, from spreading to other countries," said
   Lannoo. "And long-term solutions, like seeing whether we can have a
   federal model, like you have in the United States, of financing the
   debt of members of the eurozone."
   As the eurozone crisis has grown this year, so has criticism that
   European leaders have been too slow and timid in addressing it. Meeting
   Monday with top EU officials in Washington, U.S. President Barack Obama
   again raised concerns that Europe's problems may become America's
   problems.
   "This is of huge importance to our economy if Europe is contracting or
   if Europe is having difficulties," said Obama. "Then it is much more
   difficult for us to create jobs here at home because we send so many
   products and services to Europe. It is such an important trading
   partner for us."
   There is speculation that one or more members, starting with
   debt-strapped Greece, may leave the currency zone, triggering a domino
   effect. But Lannoo, for one, believes the eurozone will continue
   through the difficulties.
   "Basically, I think there is no way back. You start to see some studies
   that look at the cost of a breakdown of the eurozone," said Lannoo,
   "the more you read about these things, the more you see this is almost
   unimaginable."
   More bailout money for Greece and enlarging the EU bailout fund are
   also on the ministers' agenda. But the focus is on a December 9
   European summit, as pressure mounts for leaders to resolve their debt
   crisis by the year's end.