Greece is near bankruptcy, Italy careens toward fiscal catastrophe and the heralded currency union called the eurozone looks increasingly fragile. One country more than any other -- Germany -- is being called on to save it.
But will it?
European leaders gather in Brussels today and Friday to come up with a long-term solution to an alarming debt crisis that could evenutally destroy the euro currency and could even take down the European Union.
Hanging over their heads is a warning from Standard & Poor's Ratings Services that most of the nations that use the euro -- including stable Germany and France -- face a 50-50 chance of a credit downgrade if the situation does not improve. A downgrade would increase borrowing costs for the countries, further hampering the EU economy.
The nations of the eurozone, the 17 countries that use the euro as currency, have been pleading with Germany to use its financial strength to assume more responsibility for solving the crisis.
"There's an expectation that (the Germans) are leading the way, that they have to do it," said Almut Mller, a political analyst for the German Council on Foreign Relations. "Who else if not the Germans?"
But Germany is not keen on some of the solutions, and for the first time in decades is resisting European opinion and raising old fears about whether it seeks to work with Europe or dominate it.
"We will meet (in Brussels) as Europeans and take those decisions that we consider to be correct," German Chancellor Angela Merkel told reporters this week, refusing to elaborate.
As the largest economy in Europe, Germany appears to have shifted from a decades-long posture of largely going along with the ideas of the European Union elite in France, Belgium and the United Kingdom. The Germans now see themselves as different from their neighbors, wiser even, and are assuming an assertive stance that befits the nation's size and stature.
That has not sat well with nations that saw the EU as a way to bind Germany within Europe and put an end to the centuries-old conflicts for predominance that mark Europe's history.
Recent animosity against Germany has become so vocal that French Prime Minister Francois Fillon felt the need to call for an end to "Germanophobia" in debates about the debt crisis and warned that President Nicolas Sarkozy, "must not take lessons on patriotism from those who think they are defending our national interest by caricaturing our German allies."
The vitriol and shifting alliances will be the backdrop in Belgium, where heads of state will either agree on a way to resolve the crisis or further jeopardize the euro's 12-year run as a currency and stymie dreams of a United States of Europe. "The euro crisis is transforming the balance of power in Europe," said Charles Grant, director of the Centre for European Reform in London. "Germany is emerging, for the first time in the EU's history, as the unquestioned leader."
All eyes on Brussels
The summit in Brussels, which could start tonight with a dinner meeting, is being watched by banks, governments and investors whose fiscal futures may hinge on whether Europe's political leaders, who must answer to restive citizens at home, can agree on the way out of the debt crisis.
On Monday, Sarkozy and Merkel jointly called on the 17 eurozone nations to agree to one solution: accept more oversight of their budgets by some central authority, which in effect means surrendering some national sovereignty to EU auditors. They want "automatic and immediate" penalties on countries that overspend, something that has never been enforced because politicians say their publics would throw them out of office over it. Such a change would require all 27 EU nations to agree to a treaty alteration.
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