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EU leaders defend the euro

Dinner meeting on Greek bailout results in a “stabilization mechanism” plan.

rance's President Nicolas Sarkozy (front L) and Germany's Chancellor Angela Merkel (front R) walk together during a eurozone leaders summit in Brussels May 7, 2010. Eurozone leaders agreed on Friday that they would have special measures ready before financial markets open on Monday to prevent financial turmoil in Greece spreading to other countries such as Spain and Portugal.(Michel Euler/Reuters)

BRUSSELS, Belgium — The Friday night get-together was originally meant to be a rubber-stamping ceremony for the $147 billion loan to Greece from the other 15 members of the eurozone and the International Monetary Fund (IMF).

But like the Greek debt crisis itself has, the dinner meeting turned into something much bigger and far-reaching. A phone call among the G7 finance ministers was held before the meeting started, as was a special strategy session including EU President Herman Van Rompuy, French President Nicolas Sarkozy, German Chancellor Angela Merkel, European Commission President Jose Manuel Barroso and the head of the European Central Bank Jean-Claude Trichet.

After huddling many hours longer than expected, European Union leaders came out swinging.

“What you see tonight is the eurozone united around its currency, the euro,” declared Barroso in a somber tone. “We will defend the euro — whatever it takes. We have several instruments at our disposal and we will use them.”

They would start almost immediately. Throwing aside the usual calmly choreographed and time-consuming process of introducing new proposals, van Rompuy announced that in just over 24 hours the commission would present an outline of a “European stabilization mechanism to preserve financial stability in Europe.” Finance ministers of all 27 EU countries, not just the 16-state eurozone, have been called to Brussels to vote on it Sunday afternoon.

Sarkozy dramatized the rush in his press conference following the summit saying, “When the markets re-open Monday, we will have in place a mechanism to defend the euro.

"If you don’t think that’s significant,” he continued, “you haven’t been to many EU summits.”

No details of the “stabilization mechanism” plan were shared in advance, but the concept has been very controversial as some leaders see it as an opening for other countries to follow Greece into needing a rescue. Nonetheless, leaders hope the quick moves will move markets, which have remained bearish despite past rescue announcements. The creation of the $147 billion bailout, authorization of which was due to be the main subject of the dinner, has done little to boost market sentiment regarding Greek credibility.

Van Rompuy expanded on what he said had been “unanimously agreed” among the leaders of the euro-area countries.