BRUSSELS — European leaders rushed to Brussels Wednesday facing colossal pressure to do what they have failed to in numerous previous meetings: produce a comprehensive solution to the continent's increasingly unmanageable debt crisis.
As the summit began, the heads of state and government remained deeply divided on some of the key issues they need to solve or risk renewed turbulence on financial markets across the globe.
The fear is that more delays and half-baked solutions could push not only Europe, but much of the rest of the developed world back into recession, eliminate hundreds of thousands of jobs and even spell the failure of the euro, the common currency that is at the heart of Europe’s postwar unity.
"Our challenge today is not simply to save the euro. It’s to safeguard the ideals we cherish so much in Europe: peaceful cooperation amongst our nations, social cohesion and solidarity without prejudice amongst our people," said George Papandreou, the prime minister of Greece, whose country kicked off the continent’s debt drama almost two years ago.
Whether Wednesday’s summit — which was expected to last deep into the night — would indeed turn out to be the grand coup the markets are expecting and the eurozone has been promising was unclear Wednesday evening.
In particular, there was still no agreement on how to cut Greece’s debt, which is set to top 180 percent of economic output next year. Here the 17-country eurozone remained locked into discussions with banks and other private holders of Greek bonds, who have been resisting a demand from the eurozone to take significant losses.
At the same time, the eurozone itself was divided over how far a restructuring of Greece’s debt should go.
German Chancellor Angela Merkel told the Bundestag in Berlin that the goal was to bring the country’s debt down to 120 percent of economic output by 2020. That would imply a cut of more than 50 percent to the face value of Greek bonds and could be beyond what private investors would be willing to accept voluntarily.
Merkel’s Austrian counterpart Werner Faymann meanwhile told reporters that a cut of "40 to 50 percent is part of the debate."
Germany has threatened to force losses on Greek debt holders if they don’t accept sufficient losses voluntarily, while France, the European Commission and the European Central Banks insist that any debt relief had to remain voluntary.
