High borrowing costs for Spain and
Italy have eased a little on market hopes for policy initiatives at the
Brussels summit on 28-29 June. If it falls short, both countries may be
pushed closer to eventually needing bailouts.
Today's meeting will search for ways to achieve fiscal and banking union in the euro zone and, more urgently, it may also be the occasion for Spain to formally request assistance of up to €100 billion for its ailing banks.
Merkel is expected to resist pressure from Italian Prime Minister Mario Monti, French President François Hollande and Spanish Prime Minister Mariano Rajoy for less stringent euro zone fiscal policies or the issuance of common euro zone bonds.
While Spain's needs are most pressing - its medium term borrowing costs hit a euro era high at auction on Thursday - the political stakes may be higher for Italy's unelected technocrat prime minister.
With his popularity sinking, the parties that back Monti in parliament are increasingly reluctant to support his reform proposals at home, but demand he get results in the European arena to ease the pressure on Italy's recession-bound economy.
"Monti knows he has to get his ducks in a row on the European side so he can tell the parties that he's sorted that part out, and now it's their turn to help sort out Italy," said James Walston, politics professor at the American University in Rome.
"Friday's summit is important for Monti in symbolic terms because it shows Italians that he is centre-stage."
Though hugely popular when he came to office in November, his approval rating has halved as tax hikes and pension cuts exacerbated an already severe recession, and his labor reform estranged both unions and the business establishment.
But for the markets, Monti remains the man most likely to tackle Italy's debt mountain and uncompetitiveness. If he comes under serious threat, Italy could quickly supplant Spain as the euro zone's main flashpoint.
Selecting the next eurogroup president?...
According to AFP, Hollande will use the Rome mini-summit to "test the ground" for French Finance minister Pierre Moscovici's nomination as Eurogroup president.
Current chair Jean-Claude Juncker, Luxembourg’s Prime Minister, is stepping down at the end of this month. But Germany’s finance minister Wolfgang Schäuble has also been mooted as a possible candidate.
When asked about any reservations against a French Eurogroup president, German government deputy spokesman Georg Streiter said Germany did not wish to comment, having been very reluctant to do so in the past. Schäuble is still available as candidate for the presidency of the Eurogroup, a spokeswoman for the Federal Ministry of Finance said in Berlin to EurActiv Germany.
According to the spokeswoman, Schäuble's position on the issue has not changed, but she also referred to him as having said he would not mind if Juncker continued. Beyond that there is no new information on the status of the debate about the presidency, she stated. From the perspective of the Federal Government, the position of Eurogroup president should be held by an incumbent finance minister, because monetary policy is harmonised, but fiscal policy is not for now.
Der Spiegel brought the name of Estonian Finance Minister Jürgen Ligi into play, crediting him with having enough political clout to push through unpopular cuts. Ligi as president of the Eurogroup would be a signal to Greece and other "problem countries" that a full return from a deep downturn is possible.
Today's meeting will search for ways to achieve fiscal and banking union in the euro zone and, more urgently, it may also be the occasion for Spain to formally request assistance of up to €100 billion for its ailing banks.
Merkel is expected to resist pressure from Italian Prime Minister Mario Monti, French President François Hollande and Spanish Prime Minister Mariano Rajoy for less stringent euro zone fiscal policies or the issuance of common euro zone bonds.
While Spain's needs are most pressing - its medium term borrowing costs hit a euro era high at auction on Thursday - the political stakes may be higher for Italy's unelected technocrat prime minister.
With his popularity sinking, the parties that back Monti in parliament are increasingly reluctant to support his reform proposals at home, but demand he get results in the European arena to ease the pressure on Italy's recession-bound economy.
"Monti knows he has to get his ducks in a row on the European side so he can tell the parties that he's sorted that part out, and now it's their turn to help sort out Italy," said James Walston, politics professor at the American University in Rome.
"Friday's summit is important for Monti in symbolic terms because it shows Italians that he is centre-stage."
Though hugely popular when he came to office in November, his approval rating has halved as tax hikes and pension cuts exacerbated an already severe recession, and his labor reform estranged both unions and the business establishment.
But for the markets, Monti remains the man most likely to tackle Italy's debt mountain and uncompetitiveness. If he comes under serious threat, Italy could quickly supplant Spain as the euro zone's main flashpoint.
Selecting the next eurogroup president?...
According to AFP, Hollande will use the Rome mini-summit to "test the ground" for French Finance minister Pierre Moscovici's nomination as Eurogroup president.
Current chair Jean-Claude Juncker, Luxembourg’s Prime Minister, is stepping down at the end of this month. But Germany’s finance minister Wolfgang Schäuble has also been mooted as a possible candidate.
When asked about any reservations against a French Eurogroup president, German government deputy spokesman Georg Streiter said Germany did not wish to comment, having been very reluctant to do so in the past. Schäuble is still available as candidate for the presidency of the Eurogroup, a spokeswoman for the Federal Ministry of Finance said in Berlin to EurActiv Germany.
According to the spokeswoman, Schäuble's position on the issue has not changed, but she also referred to him as having said he would not mind if Juncker continued. Beyond that there is no new information on the status of the debate about the presidency, she stated. From the perspective of the Federal Government, the position of Eurogroup president should be held by an incumbent finance minister, because monetary policy is harmonised, but fiscal policy is not for now.
Der Spiegel brought the name of Estonian Finance Minister Jürgen Ligi into play, crediting him with having enough political clout to push through unpopular cuts. Ligi as president of the Eurogroup would be a signal to Greece and other "problem countries" that a full return from a deep downturn is possible.
