Euro Zone Crisis Boils as Leaders Argue, Failing at Pact

New York Times
May 23, 2012

With Greece’s membership in the euro zone teetering, fears of bank insolvency rising and Europe’s leaders bickering about what to do, the euro crisis is once again intensifying and threatening to undermine fragile growth globally.

At a summit meeting in Brussels on Wednesday, regional leaders failed to signal any significant new steps to stimulate the sputtering regional economy or resolve the competing agendas of President François Hollande of France, who favors stronger action to spur growth, and his German counterpart, Chancellor Angela Merkel, who has opposed aggressive moves to ease the pressure on Europe’s weakest economies.

Yet, the urgency for a solution to the region’s debt crisis, now in its third year, may never have been greater.

With international economic monitors warning that the Continent could slide back into recession, Spain has watched its borrowing costs climb to unsustainable levels, as concerns rise about the country’s weakened banking sector. Fears continue to grow that it will be difficult to avoid a messy divorce between Greece and the euro zone, with still unpredictable consequences for markets and other struggling European economies, including Spain and Italy.

In a conference call held on Monday, finance ministry officials from the euro zone countries were urged to make sure contingency plans were in place for all eventualities, including a Greek exit, one European official involved said.

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