EU core countries to hold crisis mini-summit

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The leaders of France, Germany, Spain and Italy will meet in Rome after the June Greek election to discuss the eurozone crisis, the Italian press reports, as talk of Greece leaving the single currency gain momentum.

Italian Prime Minister Mario Monti had reportedly suggested a meeting with German Chancellor Angela Merkel, French President François Hollande and Spanish Prime Minister Mariano Rajoy.

Merkel had appeared lukewarm on the idea, which Monti said was needed to clarify the issues at stake before a full EU summit on 28-29 June.

"The four-way meeting on Europe should take place in Rome on 22 June, after elections in Greece and France," the French daily Le Figaro reported.

Votes and ratifications

Greeks are heading to the polls on 17 June in a repeat general election, which many fear could result in a government intent on ripping up the international bailout programme and lead to Greece's exit from the eurozone.

France is holding the second round of parliamentary elections on the same day, with the new Socialist president hoping to secure a left-wing majority to help him implement tax-and-spend plans.

The quadrilateral meeting is expected to seek a balance between the fiscal discipline, promoted by the ‘fiscal compact’ treaty (see background), and the measures to foster growth, advocated by Hollande.

Merkel’s government insists that the fiscal compact be ratified at the same time as the European Stability Mechanism (ESM), the EU fund designed to bail out eurozone countries in difficulty. The ESM will become operational on 1 July.

But Merkel’s opposition – the SDP Social Democrats and the Greens – say the fiscal compact should be accompanied by new measures to promote growth and investment in Europe. Merkel needs the opposition support to secure the required two-third majority in the two houses of parliament to secure ratification of the fiscal pact.

The German opposition has also insisted that the fiscal treaty, coupled with measures for growth, be ratified on the same day in France, Germany and Italy

Ireland will hold a referendum to ratify the fiscal compact treaty on 31 May. The treaty needs the approval of only 12 of the 17 euro zone countries to enter into force. Irish Prime Minister Enda Kenny warned yesterday (28 May) that the country’s sovereign debt could be downgraded by rating agencies if voters reject the treaty. Ireland is already under an EU/IMF bailout programme. 

Merkel on the offensive

In what can be seen as a counter-offensive from Merkel, Germany's Spiegel Online magazine disclosed on Saturday a six-point plan aimed at reconciling austerity and growth policies.

Under the plan, government-owned businesses are to be sold off, protections against wrongful dismissal relaxed and obstructive regulations for companies removed. There is also talk of special economic zones and privatisation agencies based on the model of Germany's Treuhand trust, created at the time of reunification to sell off most of former East Germany's state-owned enterprises.

Growth programmes versus structural reforms: This is the conflict Europe is about to face, and for which Merkel and Hollande are now seeking allies, Spiegel writes.

Since the election of François Hollande, the new socialist French president, Angela Merkel has come under pressure to relax the austerity measures which she has described as the remedy for the eurozone crisis.

For his part, Hollande took a different view, saying during his election campaign that he would seek a renegotiation of Merkel’s “fiscal compact” to secure inclusion of measures that should lead to growth and employment.

The Germany-inspired new fiscal treaty, signed by 25 EU countries on 2 March, faces difficulties with ratification as Ireland has said it will hold a referendum and France wants the treaty re-negotiated or at least associated with growth measures.

The fiscal compact treaty would notably commit signers to having national legislation to ensure deficits remain under 3% and so-called ' structural' medium-term deficits below 0.5%.

>> Read our LinksDossier: Europe's new treaty: Towards a multi-speed union

  • 31 May: Ireland holds referendum on fiscal treaty;
  • 17 June: Greece holds parliamentary elections;
  • 17 June: France holds second round of parliamentary elections;
  • 22 June (date not confirmed): the leaders of Germany, France, Spain and Italy to meet in Rome;
  • 28-29 June: Regular EU summit in Brussels to discuss growth;
  • 1 July: Target date for the European Stability Mechanism to enter into force

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