EU leaders clinch pact to defend euro

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BRUSSELS, Oct 29, 2010 (AFP) - The European Union faced a new round of risky treaty change Friday after its leaders agreed to embark on landmark reforms designed to wade off another financial crisis by shoring up the euro.
Sweeping reservations aside, the union's 27 leaders wound up heated talks that dragged on into the early hours with an agreement to rewrite the EU's main treaty only 11 months after it came into force.
"This spring we overcame a deep crisis of economic and monetary union," said EU president Herman Van Rompuy, referring to the bail-out of Greece.
"Our next political duty was to draw the lessons for the future, to make the European economies more crisis-proof."
Yielding to pressure from an "impassioned" German Chancellor Angela Merkel, leaders agreed to prepare a "limited" change to the hard-fought Lisbon Treaty, a decade in the making after fractious negotiations and failed referendums.
But diplomats warned before the ink was dry that the road even to light change could be rocky.
It will be "very difficult" to get a unanimous agreement on rewriting the treaty, one senior diplomat said.
"It's mission impossible as there'll be as many opinions on the subject as there are EU states."
Germany, backed by France, demanded a rewrite of the Lisbon Treaty to enable it to back the creation of a permanent rescue fund enabling the union to rescue members in financial distress.
The agreement hammered out after seven ardu ous hours of talks agrees to establish the fund -- known as a permanent crisis mechanism -- to safeguard the financial stability of the euro area as a whole.
It invites Van Rompuy to undertake consultations on a limited treaty change required to that effect, with more talks set for a December summit and a final decision on "light" treaty change to come into force by mid-2013.
That is the expiry date for a temporary fund set up in May to reassure markets in the aftermath of the Greek crisis.
Germany contributed the lion's share of eurozone commitments to the 440-billion-euro European Financial Stability Fund, but feared opposition from its powerful constitutional court to further aid failing a change in the EU's Lisbon Treaty.
But some states fear that referendums in places like Austria or Ireland, whose Prime Minister Brian Cowen said it was "too early" to call, could unleash unintended damage.