New Treaty to Save Euro Crisis Splits European Union
BRUSSELS (AP) - The leaders of 23 European countries moved to tie their economies much closer together in a new treaty in their latest attempt to shore up the euro, but failed to get the four other European Union members, including Britain, to join in.
Following marathon all-night talks, the 23 decided to back a new treaty with strict oversight over national budgets, as they try to convince markets that the euro has a future in the wake of a crippling debt crisis.
Even after Friday's long-awaited deal, watched by governments and markets worldwide, the European leaders have huge hurdles still ahead. They are meeting again later Friday to work out what exactly their new treaty will contain and how violators of its strict budget rules will be policed. They want it written by March.
Britain, which doesn't use the euro, led the push against a treaty tying all 27 EU countries to tighter fiscal union, arguing that it would threaten its national sovereignty and London's esteemed financial services industry.
Most EU countries had pushed for an EU-wide accord to avoid a split, but Germany and France, the eurozone's biggest economies, quickly made clear that a deal among the 17 euro countries and whoever else wanted to join was better than nothing.
The immediate market response was lukewarm, with stock markets in Asia and Europe down sharply - the Stoxx 50 of leading European shares was trading 0.5 percent lower soon after the open while the euro is down 0.4 percent at $1.3303.
Markets may be worried that the failure of the EU to get unanimous support for more stringent budgetary rules may rattle the foundations of a union created to foster peace and prosperity across Europe following World War II.
French President Nicolas Sarkozy laid the blame at the feet of British Prime Minister David Cameron.
"David Cameron made a proposal that seemed to us unacceptable, a protocol to the treaty that would have exonerated the United Kingdom from a great number of financial service regulations,'' Sarkozy said shortly before dawn, after what he called a "difficult'' dinner meeting had dragged through the night.
"We couldn't accept this. We consider to the contrary that part of the troubles of the world come from the lack of regulation of financial services,'' Sarkozy said. "If you want an opt-out clause to not be in the euro and ask to participate in all decisions of the euro ... and even criticize it, this is not possible.''
Cameron defended his stance.
"What was on offer is not in Britain's interest so I didn't agree to it,'' he told reporters in Brussels.
"We're not in the euro and I'm glad we're not in the euro,'' he said. "We're never going to join the euro and we're never going to give up this kind of sovereignty that these countries are having to give up.''
The French president said work was proceeding on an "intergovernmental accord'' among the 17 countries that use the euro plus as many as six others, not counting Britain, Hungary, and so-far undecided Czech Republic and Sweden.
Swedish Prime Minister Fredrik Reinfeldt signaled after the meeting it was unlikely his country would join the accord.
"It would be very odd signing up to a treaty pointing out as if we were a eurozone country,'' he told The Associated Press. …