European Commission head Jose Manual Barroso has urged eurozone governments to adopt greater integration as the "far-reaching" solution to the eurozone's debt crisis.
Addressing the European Parliament in Strasbourg, France, Barroso said financial markets needed convincing that economic and monetary union was irreversible, saying otherwise "our prospects are limited."
His call came on Wednesday as Spain and Italy paid sharply higher interest rates on financial markets to loan funds, just four days before a crucial election re-run among Greeks who are widely skeptical about an international bailout plan and slumping living standards.
"We are now in a defining moment for European integration," Barroso said, accusing some European governments of failing to understand the need for a comprehensive solution."
"We must recognize that we have a systemic problem," he said. "I'm not sure whether the urgency of this is fully understood in all the capitals."
Guy Verhofstadt, the Belgian leader of the parliament's liberal group, conceded that markets were still not convinced that Europe would solve its problem.
"The markets don't believe us," said Verhofstadt, who pointed to this week's rise in Spain's borrowing costs just days after a high-profile bank bailout offered by eurozone finance ministers.
Barroso argued in Strasbourg that Europe had broken new ground with its recently unveiled plan to shelter taxpayers from the risk of bank bailouts. The European executive's other recent proposals would involve the issuance of Eurobonds - international bonds denominated in a currency not native to the country where they are issued - and an EU-wide banking supervisory body. Some EU governments regard the proposals with skepticism.
Italy's Monti relaxed
Italian Prime Minister Mario Monti on Wednesday exuded calm regarding his own country's finances.
"We are relaxed over Italy's standing on the international stage and on the markets," Monti told his cabinet.
The former EU commissioner, who heads a technocratic cabinet that since December has instituted tax hikes and spending cuts, said Italy's public deficit of 3.6 percent of gross domestic product (GDP) was lower than those of many other EU countries.
Italy's banks were "stable," he added, saying they were not exposed to real estate woes like those gripping Spain.
Italian loan rates rose, however, on Wednesday, with 12-month money costing 3.9 percent, back near the level last seen in December. Last month the rate was 2.3 percent. Spanish 10-year bonds stood at 6.72 percent on Wednesday, near the 6.8-percent record reached on Tuesday.
In Madrid, Spanish Prime Minister Mariano Rajoy said he would also press for more European integration to protect the euro at a summit with Germany, France and Italy on June 22.
ipj/ncy (AFP, AP, dpa)