BRUSSELS (MNI) – The European Commission on Thursday urged EU
leaders to reach a compromise over measures to diffuse the crisis in
Eurozone sovereign debt markets as deep divisions emerged between the
common currency’s two biggest economies, Germany and France, over key
elements of a plan.

“The whole EU universe will have to move towards a compromise
because we do have to move towards a decision,” said a spokeswoman for
the Commission.

“If we want to make progress then all EU leaders will have to
commit to discussions. This may well require compromises from all
angles,” she said.

EU leaders are set to meet on Sunday set to discuss a five-pronged
strategy to stop the crisis of confidence in Eurozone governments’ debts
from spreading.

With just days to go, deep divisions remain between Germany and
France over crucial elements of the strategy, including how to stretch
the euro zone’s bailout fund’s resources. Paris backs a plan that would
rest upon the European Central Bank while Berlin is in favour of a
scheme that would see the bailout fund offer credit protection to
investors on first losses.

The Eurozone’s two most important countries, which earlier this
month claimed to “agree on everything”, are also divided over how a
restructuring plan for Greek debt involving private investors should be
altered.

The other items on the agenda are measures to recapitalize Europe’s
banks to withstand a deepening of the debt crisis, structural reforms to
boost economic growth prospects, and new measures to enhance economic
coordination and oversight between euro area member states.

“We cannot fix one of the elements without fixing all the others,”
a Commission spokesman warned. “Decisions on all aspects need to be made
in parallel.”

Euro zone finance ministers meeting in Brussels Friday are expected
to discuss a recommendation from the Commission, International Monetary
Fund and ECB to approve an E8 billion tranche of aid to Greece before
mid-November, and a separate report analyzing the sustainability of the
country’s debt burden.

On Saturday the 17 finance ministers will be joined by their 10
other EU counterparts, for a crucial weekend of talks that markets and
the EU’s biggest trading partners hope will be decisive.

Finance chiefs from the 20 largest economies and the IMF last week
urged the EU to get a grip on the crisis which they said threatened
world growth.

Brussels bureau: +332495228374; pkoh@marketnews.com

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