Spain's Rajoy in Berlin as fiscal compact debate comes to a head

Jan 26, 2012, 11:04 GMT

Berlin - Spanish Prime Minister Mariano Rajoy was due to meet Chancellor Angela Merkel Thursday, as eurozone negotiations on an historic fiscal compact come to a head.

Urged on by Germany, most EU nations are expected to agree terms next week at a summit in Brussels for the treaty, surrendering some of their power over government spending and submitting themselves to outside discipline if they overspend.

Rajoy, who was to receive a guard-of-honour welcome outside Merkel's office, was expected to press for a more generous German stance as Spain tries to dig its way out of recession.

Spain is among the nations that have been hardest hit by the sovereign debt crisis.

Merkel delivered a keynote speech Wednesday at the World Economic Forum in Davos, Switzerland in which she warned that her country could not shoulder unlimited burdens in helping to overcome the eurozone's troubles.

Calls for doubling or tripling emergency measures to save the euro were not credible, Merkel said, adding, 'If Germany makes promises on behalf of all European countries which it cannot keep, then Europe is leaving itself vulnerable to attack.'

German sources said Berlin fully expected a deal on the fiscal compact to be struck at Monday's summit. Most EU nations barring Britain agreed in December to enter negotiations on the deal, with Merkel pushing for it to be concluded swiftly.

A stream of national leaders have visited Berlin in recent weeks as diplomats hammer out the terms of a compact to have it ready for approval on summit day.

Just before the Brussels summit, there will be a brief, separate three-way summit of Merkel, French President Nicolas Sarkozy and Italian Prime Minister Mario Monti, the sources confirmed.

The sources said there was little likelihood now of a go-ahead by summit day of the next stage of a bailout for Greece. A 'troika' of officials from the European Commission, the International Monetary Fund and the European Central Bank must give the green light first.

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