European Union leaders gathering for a summit are expected to agree a limited change to the bloc's basic treaty to allow setting up a permanent rescue fund for countries using the euro.
At the end of the first day of the two-day summit, it was reported that EU leaders had approved a small change to the bloc's founding treaty -- the Lisbon Treaty -- in order to create a permanent bailout system for eurozone states, though the details of the change were not announced.
The envisaged permanent rescue fund is meant to calm the financial markets, which remain nervous over the prospects for long-term stability of the euro, in the wake of the massive debt bailouts of Ireland and Greece by the EU and the International Monetary Fund.
EU member states agreed on the need for such a permanent fund in October, and the latest meeting is expected to finalize the wording of a paragraph that will have to be inserted in the union's Lisbon Treaty to make it lawful.
Reports from Brussels say the new facility will have the same level of funding as the present temporary facility, namely 750 billion euros ($993 billion). Some leaders wanted the new panel to have a further injection of funds, but Germany -- which pays for the lion's share of EU projects -- opposes the idea.
But, speaking to parliament on December 15, German Chancellor Angela Merkel pledged that no EU member state would be "abandoned" if in financial distress.
"No one in Europe will be left alone, no one in Europe will be abandoned," Merkel said. "Europe succeeds when it acts together and I would add, Europe succeeds only when it acts together."
The summit may also receive a request from the European Central Bank (ECB) for eurozone states to boost its capital holdings.
This would be the first time that the bank has made such a request, and follows the ECB's expenditure of 72 billion euros ($95 billion) this year to buy government bonds of vulnerable countries like Portugal, Greece, and Ireland.
These purchases have aimed at stabilizing those countries' borrowing costs on the financial markets. Germany has indicated it would take a positive view of such a request by ECB President Jean-Claude Trichet.
Carsten Brezsk, a financial analyst with ING bank, says he hopes this summit marks the start of a more far-sighted approach by the EU to its problems.
"Up to now, we always had this kind of ad hoc solutions go from one meeting to the other, the only target being to ring-fence the country in question and hoping everything would be fine," Brezsk says.
"So now it would be good if they [EU leaders] would think ahead at least two steps, not only one step, if they manage to do so, I think they can rebuild trust in politics."
Growing Signs Of Tension
In a sign that the eurozone's debt troubles aren't confined to the countries at its periphery, the key rating agency Standard & Poor this week expressed worry about Belgium's credit rating.
Belgium has been without a government since June after an inconclusive election, and the resulting economic drift has contributed to the fact that the country's debt is estimated to be now almost 100 percent of its economic output -- the highest in the eurozone after Greece and Italy.
As they meet in Brussels, the EU leaders must be well aware of the growing unpopularity of their strict austerity programs designed to rein in the excessive debts contracted in better economic times.
In the past week angry students have rioted in London, attacking Crown Prince Charles' car as the British government passed legislation sharply increasing university tuition fees.
Rome has suffered its worst rioting in 30 years as antigovernment protesters stormed through the streets of the Italian capital. More than 100 people were injured in running battles between police and rioters.
And workers in Greece on December 15 staged another general strike which brought the country to a standstill as hundreds of thousands walked out of their jobs, paralyzing air, rail and maritime services.
written by Breffni O'Rourke, with agency material