BRUSSELS, (Reuters) – Italy and Spain, battling searing market pressure in the euro zone’s widening debt crisis, held up agreement on measures to promote growth at a European Union summit yesterday to demand urgent action to bring down their borrowing costs.
Italian Prime Minister Mario Monti and his Spanish counterpart, Mariano Rajoy, refused to sign off on a 120 billion euro ($149 billion) growth package until EU paymaster Germany approved short-term measures to ease their cost of credit, officials said.
Hours later than planned, European Council President Herman Van Rompuy came out to announce a deal in principle on measures to stimulate infrastructure investment and give more capital to the EU’s soft-lending arm, the European Investment Bank.
“There’s no blockage, we keep on working and we move on,” he told a belated news conference, playing down reports of a row.
But Italy, Spain and some other countries said they wanted to see steps to allow euro zone rescue funds to buy their government bonds and support their banks before they would give final approval.
“There’s an epic battle going on between those who seek immediate and unconditional solidarity and those who seek to fundamentally change the way European economies are run and put Europe on a course of stability, discipline and growth,” one EU official reported after nearly eight hours of debate.
Another said Socialist French President Francois Hollande, the strongest backer of the growth pact, had also raised concerns and sought a delay in introducing stricter measures to enforce EU budget discipline. There was no comment from the French camp.
Merkel cancelled a planned news briefing as the leaders argued over the EU’s future long-term budget and the growth package. The 27-nation EU summit agenda was turned upside down with plans for euro zone leaders to hold a late-night discussion on the future of their troubled 17-member currency union.
It was the 20th EU summit since the sovereign debt crisis began in early 2010 after Greece disclosed its public deficit was far higher than previously reported.
Policymakers played down any prospect of a rapid solution to the turmoil which has forced Greece, Ireland, Portugal and now Spain and Cyprus to seek international bailouts.
