BRUSSELS, October 15 – EU leaders will try to show at a crunch summit starting Wednesday that they have finally brought the financial crisis under control, eager to revive flagging confidence in shell-shocked banks.
Desperate to contain the crisis, governments across Europe have pledged about 2.0 trillion euros (2.7 trillion dollars) to bring banks back from the brink of collapse.
Leaders from the 27-nation European Union, meeting Wednesday and Thursday in Brussels, are due to rally behind plans hammered out on Sunday among eurozone countries to tackle the crisis.
"The stakes are higher than ever before and the coming days will be crucial for the international financial community," British Prime Minister Gordon Brown told reporters in London on Tuesday.
"It will take time — and these are tough times — for us to resolve the problems that have emerged in the banking system. The resolve of our leaders will be put to the test in the coming days," he said.
In emergency talks in Paris, leaders from the 15 countries sharing the euro, plus Britain, agreed to prop up the hardest-hit banks through cash injections and underwriting loans between financial players.
Until the Paris talks, Europe had struggled to convincingly coordinate its response to the financial crisis, which only sapped confidence in the system all the more.
Stock markets in Europe welcomed the measures on Monday and Tuesday with a massive rally, albeit from the beaten-down levels reached in the last week during one of the worst routs in years.
"Despite the positive reaction of the markets …, there is no reason to declare the end of the financial crisis and swing into exaggerated enthusiasm," Luxembourg Prime Minister and veteran summiteer Jean-Claude Juncker warned.
While extending the eurozone plan to the broader EU should only be a question of a rubberstamp, the Czech Republic has sounded reservations about such massive state intervention to bail out banks.
The Czech Republic\’s ambassador to the EU, Milena Vicenova, voiced concerns that guarantee measures in wealthier neighbouring EU countries could trigger a "flight of capital" out of her country.
"We have some concerns that there might be some spiral effects," she said, insisting that EU competition and state aid rules "have to be followed" in order to ensure a level playing field in Europe.
However, a source close to the French presidency said that if the Czech Republic stuck to its guns, "then the other 26 countries could adopt the package" without Prague.
European Commission chief Jose Manuel Barroso urged European leaders ahead of the summit not to use the financial crisis as an excuse to sideline their commitments to tackling climate change, which they are also to discuss.
"Climate change does not disappear because of the financial crisis. Tackling climate change is central to Europe\’s future prosperity and to preserve the quality of life on our planet," he said on the eve of the summit.
Last year the European Union adopted the target of reducing greenhouse gas emissions by 20 percent in 2020 from 1990 levels.
Included in that package was an engagement to bring renewable energy sources up to 20 percent of the total and to make 20 percent energy savings.
On Thursday, leaders are due to endorse sweeping new guidelines to manage immigration with a greater focus on selecting migrants for their labour skills while cracking down on illegal immigrants.