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Germany vs. Italy: At eurozone meeting, the battle is over urgent action

As Europe's leaders meet in Brussels today, Germany is pushing hard for long-term reform. But Italy PM Monti says Europe faces disaster if high borrowing costs aren't addressed quickly.

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German Chancellor Angela Merkel speaks to the media as she arrives for a two-day European Union leaders summit in Brussels June 28.

Eric Vidal/REUTERS

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With Italy and Spain in acute crisis, Europe’s leaders convene in Brussels today for a summit that appears heavy on long-term reform, but scarce on short-term measures to quickly staunch the crisis.

Like 19 other summits since 2010, the two-day event is forecast as a “moment” in European history designed to show solidarity, contain the fear of spreading debt, and reassure markets as a crisis that started with Greece now threatens Italy and Spain, the third- and fourth-largest European economies. While expectations of the summit are low, analysts say that the key issue for for markets is the appearance of clear decisions, even if they are designed for the long term.

EU leaders will discuss a new “road map” for closer integration, including establishing a European finance minister, a banking union, shared fiscal sovereignty, and the possibility of allowing Europe's central bank to be a “lender of last resort,” not unlike the Federal Reserve in Washington. The most contested plans are over ceding national fiscal powers to Brussels, and whether to share debt liability and the cost of the crisis across the eurozone.

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