“We need to act together jointly,” Merkel said Wednesday. “It’s not possible to have a simple solution. We will have to deal with this situation for years. . .We have a historical obligation to fulfill.”
But underlining how many issues remain unresolved, Merkel said that she would not commit any more Germany money to supporting Europe. She called for private investors to make a “large contribution” to ease Greece’s debts.
After Merkel spoke, the parliament gave her a strong endorsement for negotiations in Brussels, voting 503-89--with four abstentions--in favor of her outline about how to increase the power of the bailout fund.
European leaders have been frustrated in their efforts to craft a response to the continent’s debt crisis by Wednesday’s self-imposed deadline. In Italy, meanwhile, a political stalemate in Italy over austerity measures has further diminished hopes for a quick resolution.
As top European officials convene in Brussels for their second summit this week on the crisis, they are sending conflicting signals about how much progress they have made on key elements of a rescue plan.
Still unsettled on Tuesday were how best to use the limited resources of a European bailout fund to help cash-strapped governments such as Greece and Italy, and how much of a loss private investors such as banks should take on their holdings of Greek bonds, which have lost much of their market value.
Adding to the uncertainty, finance ministers from euro-zone countries canceled a meeting without public explanation, deferring critical decisions to the summit of government chiefs.
U.S. Treasury Secretary Timothy F. Geithner said Tuesday that only clear, detailed steps would help convince global investors that Europe can contain its problems, which are rooted in high levels of government borrowing and have threatened to undermine the region’s banking system. The debt crisis is taking a toll on Europe’s economy and could trip up the recovery in the United States.
After days of intense deliberation and high-level meetings, European leaders have agreed on the broad outlines of a plan but may be weeks from filling in the specifics.
“We want to see, like the world wants to see . . . the details, not just the objectives,” Geithner said as he visited a factory in North Carolina.
Geithner has joined senior officials from China and other economic powers in pressuring the 17-nation euro currency region for a more forceful plan to shore up its banks, a financing plan for embattled Greece, and a guarantee that the governments of large countries such as Italy and Spain will be able to borrow money at affordable rates. If their borrowing costs jump, these countries may face default, and Europe would be hard-pressed to come up with enough money to bail them out.