Leaders set to discuss Greek crisis

Taoiseach Brian Cowen this afternoon joins fellow EU leaders for a summit overshadowed by a slump in the single currency and by rifts over a bail-out for the crisis-hit Greek economy.

A routine gathering intended to discuss long-term plans for recovery built on jobs and growth will instead struggle to restore the euro’s stability and credibility.

Pressure for an emergency “mini-summit” of the 16 euro-zone countries earlier in the day was being strongly opposed by Germany late last night.

And Berlin’s insistence that the International Monetary Fund should be involved in any Greek bail-out raised concern that the EU will be seen as unable to sort out its own problems within the single currency family.

Mr Cowen and other leaders of non-euro member states, are on the sidelines, with no suggestion that they contribute to any eurozone bail-out for Greece.

EU Monetary Affairs Commissioner Ollie Rehn insisted that the summit must agree the terms of any help for Greece this week, to restore confidence in Athens and send a strong signal beyond Europe that the situation is under control.

That became even harder when eurozone member Portugal’s credit rating was downgraded yesterday and the euro’s value fell against the dollar and the pound.

Germany, as the EU’s traditional paymaster, would normally be expected to take a lead in resolving the Greek problem. But Chancellor Angela Merkel, with an eye on domestic politics, made clear that any bail-out for Greece should be as a last resort, and only if eurozone members agree tough rules and sanctions in future for breaching single currency debt and deficit limits, and if the IMF plays a role.

That has put her at odds with European Commission President Jose Manuel Barroso, who drew up plans for a series of loan agreements between Greece and other – solvent – single currency member states.

He fears that continuing confusion, delay and divisions over what to do are only worsening the EU’s political as well as economic credibility.

Centre-right leader in the European Parliament Joseph Daul said: “This week, a European solution to the Greek crisis must absolutely be found.

“It is in the interests of all countries to guarantee the stability of the euro and the European monetary system.”

The leader of the Liberals and Democrats, Guy Verhofstadt commented: “Incredibly, the public statements of some members of the European Council (EU leaders) have fuelled more anti-European sentiment in four days than all the eurosceptics have achieved together in four years. We are destroying all our efforts to bring Europe closer together.

“We have witnessed several weeks of uncertainty, dithering and squabbling between members of the Eurozone over the most appropriate response to Greek debt problems. We now need a decision.”

One senior diplomat said the EU had rarely experienced such a “bleak moment”, with severe economic problems, chronically low growth of just 0.7% and “a lot of bad debt in the banks”.

He warned: “It is hard to see how we break out of this bleak economic picture.”

This was coupled with continued “institutional navel-gazing” and “so much in-fighting” over the new EU “foreign service” being set up by EU High Representative Baroness Cathy Ashton.