Brussels: European leaders wrapped up their final summit of a tumultuous 2010 yesterday pledging to defend debt-plagued euro nations to the hilt, but amid stark warnings the sickness is far from cured.
European Union President Herman van Rompuy said plans for the 27 states to rewrite their treaty and set up a permanent emergency rescue fund from mid-2013 would make the world's biggest tariff-free trading bloc "more crisis-proof."
The successor to a temporary, IMF-backed trillion-dollar facility created after the crisis was unleashed in Greece, would anchor "a comprehensive response to any challenges, as part of the Eurozone's new economic governance."
German Chancellor Angela Merkel said the summit "clearly stated that the euro cannot be dissociated from Europe" and vowed that the size of the future bailout fund, poised to introduce penalties for private-sector holders of government debt, would be "convincing."
Alongside Greece, Ireland has also had to call in emergency loans from partners, with Portugal, Spain, Belgium and even Italy also considered at risk by experts going into 2011.
Ratings agency Moody's gave an emphatic thumbs-down yesterday to Europe's efforts, slashing Ireland's credit rating by a stunning five notches to Baa1, three notches above junk.
Merkel maintained that the more "coherent" cross-border economic policy becomes, citing comparisons of national budgets and even social welfare systems, "the less the fund's size will matter."
French President Nicolas Sarkozy called for the EU to "go further," but British Prime Minister David Cameron was more interested in crimping the bloc's budget for the next decade.
Despite a vow by the EU collectively to do "whatever is required," analysts anticipating fresh bailouts complained at a lack of detail.
Carsten Brzeski, senior economist with ING, accused EU leaders of indulging in "window-dressing," with Frank Engels of Barclays Capital decrying "yet another missed opportunity" to meet investor concerns and calm markets.
Jonathan Loynes, chief European economist at Capital Economics, said the EU was "typically vague," doing "little to address uncertainties over the burden likely to be shouldered by private sector bondholders."
