Key European leaders pledged at a
meeting with U.S. President Barack Obama Monday that they will push for
closer economic integration of the 17-nation eurozone to help resolve
the continent's burgeoning debt crisis.
European Council President Herman Van Rompuy and European Commission
President Jose Manuel Barroso called for uniform, binding controls over
government spending in the countries that use the euro currency. Mr. Van
Rompuy said a "roadmap" spelling out a new eurozone economic plan would
be presented to a European Union summit in early December.
Barroso, speaking after a White House summit in Washington with
President Obama, said European leaders "are determined to overcome the
current difficulties." Debt-ridden Greece, Ireland and and Portugal have
already been forced to secure international bailouts, while Italy, Spain
and other countries are facing sharply increased borrowing costs to
finance their governments.
Mr. Obama said the U.S. is prepared "to do our part" to help Europe
solve its debt crisis, which he described as being "of huge importance
to our economy." But he did not spell out any specific actions the U.S.
might take.
A new report says the eurozone's economy is falling into a recession.
The Organization for Economic Cooperation and Development said it
expects the eurozone economy will shrink by an annualized rate of one
percent in the last three months of the year, and by another four-tenths
of one percent in the first quarter of 2012. The OECD, a policy forum
for 34 advanced economies, said the European Central Bank needs to
intervene decisively to stabilize the continent's debt crisis.
White
House spokesman Jay Carney said the European debt crisis has "created a
headwind for much of the year" on the sluggish U.S. economy. He said the
U.S. government believes it is "critical" for European leaders to "move
forcefully" to resolve the debt issue and that the eurozone nations have
the financial capacity to deal with it.
As debt worries in Italy, Spain and elsewhere roil international
financial markets, the continent's economic leaders - Germany and France
- are starting to negotiate a new fiscal agreement that would enforce
budget discipline across the eurozone. That is something individual
countries have long resisted, as they fear the loss of sovereign
control.
The effects of the debt crisis have been widespread. Belgium was forced
to pay sharply higher interest rates on Monday, while the Italian
Banking Association promoted a patriotic drive to get Italians to buy
government bonds to try to keep interest rates from spiraling out of
control.
Credit rating agency Moody's warned in a statement Monday that while it
believes there will not be widespread defaults in the eurozone, the
probability of multiple debt defaults is "no longer negligible."
