EU leaders change Lisbon Treaty in bid to calm markets
EU leaders today changed a treaty in a dramatic move to calm financial markets and restore the credibility of the single currency.
The "limited" revision of the Lisbon Treaty - 10 years in the making and intended to last unchanged for decades - will be confirmed on the second day of an EU summit grappling with the fallout from months of stop-gap measures to shore up ailing economies in the eurozone.
A new "European Stability Mechanism" will replace the existing temporary emergency rescue arrangements under which massive sums have been injected into Greece and Ireland to help prop them up and restore single currency stability.
The move required a treaty change to make it legally watertight.
A treaty "natural disaster" article which allowed the EU budget to be used as collateral to raise money for Greece and Ireland could theoretically be used again in future if the new permanent bailout mechanism is not enough.
Last night British Prime Minister David Cameron won agreement on a summit declaration that Article 122 "need not and should not be used for financial bailouts" after the new permanent mechanism comes into operation at the start of 2013.
A Downing Street spokesman said Mr Cameron was confident that the declaration, although not legally binding, was enough to ensure that any future bailouts for eurozone countries after 2013 will remain a matter entirely for eurozone nations.
European Commission President Jose Manuel Barroso last night hailed the treaty change deal as a sign of the EU's "common resolve" to enhance Europe's growth prospects.
"We are walking the walk, not talking the talk, and proving wrong those who predicted the demise of our common currency."
The summit chairman Herman Van Rompuy added: "We will do whatever is required to save the euro." The EU was acting "collectively", as it had done all year to ensure the euro's stability.
But the summiteers also acknowledged yesterday that, as well as preparing to throw more money at any future struggling eurozone members, member states must step up growth and jobs policies to ensure long-term economic revival follows short-term recovery.
The draft summit conclusions said the "Europe 2020" strategy for jobs and growth "will continue to guide the Union and the member states in responding to the crisis and promoting the delivery of structural reforms".
They also called for accelerated work to put in place laws on "economic governance" by June next year.
On the summit sidelines, Mr Cameron rallied France and Germany behind a joint declaration calling for budget restraint in the EU's long-term budget plans, now under review.
