Italy and Spain have refused to sign an agreement at a European Union summit on measures to promote growth - at least for now. They are demanding quick action to bring down their borrowing costs.
Italy and Spain on Thursday refused to approve an agreement on measures to promote growth at a European Union summit, in an effort to force swift action to bring down the two countries' borrowing costs.
Italian Prime Minister Mario Monti and his Spanish counterpart, Mariano Rajoy, refused to sign off on the 120 billion euro ($149 billion) growth package agreed to by other European leaders Thursday until EU paymaster Germany approved short-term measures to ease their cost of credit.
"The growth pact on its own does not solve the current problems," a Spanish diplomat said, echoing his countrymen's concerns that the growth package will do little to ease their cost of credit.
The standoff will not help ease tensions between northern creditor countries and the heavily indebted southern ones.
Agreement in principle
Late Thursday, European Council President Herman Van Rompuy came out to announce a deal in principle on measures to stimulate infrastructure investment and give more capital to the European Investment Bank.
But reports soon surfaced about the objections from Italy and Spain.
French President Francois Hollande said he understood the indebted countries' opposition. He confirmed that Italy and Spain had withheld approval of the growth pact until leaders agree to short-term measures to stabilise markets.
Holland added that he expected to a deal to be completed on Friday.
"Everyone must make an effort so that markets are convinced that the measures are effective, and they must be," Hollande said. "We all need Italy and Spain to have lower interest rates today and for Spain's banks to b recapitalised because that will bring relief for the eurozone."
Dutch Prime Minister Mark Rutte sided with German Chancellor Angela Merkel in arguing against any premature move to share liability.
"It's crucial for us to avoid taking measures that would ease pressure on southern Europe to reform," he said.
The summit was scheduled to continue on Friday.
tm/pfd (Reuters, dpa)