BRUSSELS: In a cry for help, Italy and Spain joined forces Thursday, blocking a key EU deal on growth failing swift pledges from their partners to fight off market pressure threatening their economies.
The strong-arm tactics spoiled a crucial two-day summit set to end Friday with a deal on a growth pact aimed at breathing life into Europe’s flagging economies and sealing splits between the bloc’s 27 nations.
While European Union heads of state and government announced an agreement to inject 120 billion euros ($150 billion) into cross-border infrastructure projects that would create much-needed jobs, they were unable to finalise a so-called “growth compact” due to the stand by Spain and Italy.Madrid and Rome have seen their borrowing costs soar as markets lose confidence in their ability to reduce huge deficits.
“There are two countries that are very keen to ensure there is agreement on long-term measures and short-term measures,” EU president Herman Van Rompuy told a news conference after seven hours of talks.“I wouldn’t say there is a blockage, discussions are ongoing,” he said.
Officials from both countries said Spanish PMMariano Rajoy and Italian counterpart Mario Monti had tied backing for a growth pact to their demands for short-term measures to bring relief on the bond markets.