EU leaders meeting in Brussels have been hoping to finalize a eurozone bailout fund, but this plan is looking less and less likely. This is due, in large part, to the fiscal crisis taking place in Portugal.
Problems in Portugal
Prime Minister of Portugal, Jose Socrates, recently offered his resignation. As Socrates explained, “This crisis will have very serious consequences in terms of the confidence Portugal needs to enjoy with institutions and financial markets.”
While Socrates had originally planned to attend the two-day European Union summit with the political authority to negotiate a deficit-reduction plan, he will not have that authority anymore.
In addition to these issues, the EU has other issues to contend with as well. They are in a deadlock over Ireland’s request to cut the interest rate that they are currently paying on their $120 billion bailout. In addition, Finland is adding to the troubles, as they are holding up a deal that would expand the lending ability of the current rescue fund for the euro.
No Compromise Coming
Many had hoped that the current summit would help the EU leaders to finalize a compromise for solving the debt crisis. German Chancellor Angela Merkel, however, has pointed out that such great steps have a slim chance of happening. She did encourage the EU countries to continue to press ahead to coordinate economic policies. As she said in Frankfurt, “It couldn’t make the situation any worse and it’s worth a try.”