RENEE MONTAGNE, Host:
It's Morning Edition from NPR News. I'm Renee Montagne. And in Europe, there's some sense that governments may finally be getting their arms around the financial crisis. A massive economic rescue plan announced in Paris over the weekend helped spark a rebound in world stock markets at the beginning of this week. Today, the leaders and finance ministers of all 27 European Union nations gather in Belgium to work out the details of the plan and extend it, as needed, across the continent. Eleanor Beardsley sent this report from Brussels.
ELEANOR BEARDSLEY: After weeks of dithering, Europe seems to have finally got its act together. Markets soared early this week after the 15 Eurozone nations committed more than $2 trillion to restore trust between banks and thaw frozen credit markets. French President Nicolas Sarkozy, whose country currently holds the EU presidency, said only an audacious plan could resolve the crisis.
P: (Through Translator) When financial institutions have lost all credibility, markets are in chaos and panic reigns, people look to public institutions for a solution. And the time for everyone acting in their own interest is over.
BEARDSLEY: Sarkozy said France would spend up to $500 billion over five years to guarantee interbank lending and recapitalize banks through government-guaranteed loans paid back at market rates. In simultaneous press conferences in Madrid, Rome, London and Berlin, other leaders pledged comparable amounts in similar plans, all providing close collaboration between governments and banks. Speaking ahead of today's summit, President of the European Commission Jose Manuel Barroso said politicians are on the right track.
P: Only a coordinated approach gives our efforts the credibility that citizens and markets expect. But let me be clear, this is and remains work in progress. We see light at the end of the tunnel, but we are not yet there.
BEARDSLEY: President Bush is said to be in close contact with Sarkozy over Europe's action plan. And Sarkozy and Barroso will head to Washington on Saturday, where they have been invited to meet with the president at Camp David. While many hope the improved transatlantic coordination will stop the downward slide, recession looms over both sides of the Atlantic like a dark cloud. And even if the bailouts work, no one yet knows what their effect will be on the real economy. Even as financial experts descended on EU headquarters in downtown Brussels, there were doubters in the street. Belgian native Nicolai Lonjean(ph) says only a week ago, Germany and France were at loggerheads over the crisis and what to do about it.
MONTAGNE: Honestly, I think it's difficult for Europeans to talk with one voice still, now. So it will be very difficult for us to take the lead in this solution. And I'm hoping that this could work, but I'm really afraid that this would not work.
BEARDSLEY: EU leaders meeting here will also discuss energy and climate issues, relations with Russia, and deal with questions about the bloc's future after Ireland's rejection of the new European constitution last spring. But clearly at the top of the agenda is how the EU can restore confidence in financial markets and get banks lending, and the economy moving, again. Dravko Pudvarsachov(ph), who immigrated to Belgium from fellow EU nation Bulgaria, says he began to feel better after EU leaders came together to raise bank-deposit guarantees across the continent.
MONTAGNE: The European Union is showing power and is giving the people assurances that the governments are staying behind the citizens.
BEARDSLEY: According to one European diplomat, the financial-rescue package will likely be endorsed by everyone except the country next in line for the EU's presidency. The Czech Republic says it doesn't need it; it has no financial problems. For NPR News, I'm Eleanor Beardsley in Brussels. Transcript provided by NPR, Copyright NPR.
