EU ministers work on rescue plan

May 10, 2010 at 12:00a.m.

Associated Press

BRUSSELS

European Union finance ministers were considering a $645 billion defense package for the embattled euro, hoping it will suffice to keep markets from targeting the eurozone’s weaker members, EU sources said late Sunday.

Rushing to finalize an agreement before Asian markets officially open today, the ministers were discussing an aid plan that would have the EU Commission make $75 billion available while countries from the 16-nation eurozone and the IMF could combine with a promise to back bilateral loans and guarantees for up to $570 billion.

Spanish Finance Minister Elena Salgado, speaking as she arrived for an emergency meeting of the European Union’s finance ministers in Brussels, said they were determined to safeguard the currency used by 16 of the EU’s 27 member states. The euro has come under increasing pressure since the financial meltdown of one of its members, Greece.

France and Germany, the two largest members of the eurozone, agreed on measures to resolve the European financial crisis, according to a two-sentence statement from French President Nicolas Sarkozy’s office Sunday.

But Britain sought to maintain a clear monetary line between the problems of the euro and its cherished pound.

“I am very, very clear that if there is a proposal to create a stability fund for the euro, that has got to be a matter for the euro-group countries,” British Chancellor Alastair Darling told the BBC. “What we can’t do is to provide support for the euro. That has got to be for those countries that use the euro.”

The ministers hoped to announce a deal before trading opened in Asia, if a qualified majority of the 27 EU finance ministers sign on.

Sarkozy’s office said he spoke with President Barack Obama and the two leaders agreed on “the need for a large-scale response to the current disorders that are affecting the markets.”

The EU’s slow response to the crisis and its failure to keep Greece from reaching the brink of bankruptcy triggered slides in the euro and global stocks last week, and intensified fears the crisis would spread to other countries with shaky finances such as Spain and Portugal.

“We are going to defend the euro,” said Salgado, who presided over the Brussels meeting. “We have to give more stability to our currency ... We will do whatever is necessary” to reach an agreement.