Conclusive summit deal on euro zone crisis looks elusive
By Luke Baker
BRUSSELS (Reuters) - Prospects for a comprehensive deal to resolve the euro zone debt crisis at a summit on Wednesday look dim, with deep disagreement remaining on critical aspects of the potential agreement, including how to give the region's bailout fund greater firepower.
EU officials and European diplomats are lowering expectations of a breakthrough when the 17 euro zone leaders meet, despite Franco-German assurances only weeks ago that a "comprehensive solution" to more than two years of debt and economic turmoil would be found by the end of the month.
While there appears to be broad consensus on the need for around 110 billion euros ($150 billion) to be injected into the European banking system to help it withstand a potential Greek debt default and wider financial contagion, there is little clarity on either of the other two critical parts of the plan.
One element involves scaling up the region's 440 billion euro bailout fund, known as the European Financial Stability Facility, and the other is focused on reducing Greece's debt burden by deepening the losses private investors -- major banks and insurance companies -- must take on their Greek bonds.
EU leaders will consider two methods for scaling up the EFSF, one by using it to offer guarantees to purchasers of new euro zone debt, and the other using part of its capacity to set up a special purpose investment vehicle that would attract money from sovereign wealth funds and other investors to buy debt. They might also agree to combine both options.
NO CONCRETE NUMBERS EXPECTED
Whereas financial markets have been hoping for weeks that Wednesday's summit, scheduled to start at 11:00 a.m. EDT with a gathering of all 27 EU leaders, followed at 1730 GMT by the meeting of the euro zone heads of state, will produce detailed figures on how to combat the debt crisis, there is now little likelihood of concrete numbers, sources say.
"The numbers are not yet finalized -- you have to have all parameters in place and see what is needed and what the leverage factor would be. It needs a lot of technical work to come up with a number," one EU official said, adding that discussions would continue on Wednesday to forge a pre-summit consensus. Continued...