EU leaders call for unprecedented and quick co-operation

European leaders yesterday called for quick and unprecedented co-operation among the European Union countries to find a way out of the financial crisis engulfing the global economy.

European Commission President Jose Manuel Barroso said yesterday that European governments need "unprecedented" co-operation. "The commission has long called for deeper economic policy co-ordination within the euro area. We now need an unprecedented level of co-ordination to deal with this unprecedented crisis," he said in a statement ahead of a summit of 15 European nations.

The Paris summit has been seen as a last chance to hammer out a co-ordinated bank rescue package before panic-stricken stock markets reopen today.

"I am very hopeful that we will take an important step forward today by agreeing a clear response for the euro area to the current crisis," Barroso said. "We must show European citizens and the markets Europe's capacity and determination to act in concert."

He said the Paris summit of eurozone countries should take its lead from a G7 action plan announced earlier over the weekend after a meeting in Washington.

"We need to build on what G7 finance ministers decided with a more detailed programme at European level. That is the result I want from today and from this week's European Council. I believe we can achieve it," Barroso said, referring to a EU summit later this week.

"I want Europe to speak with one voice for Europe and for the world because this is a global crisis," French President Nicolas Sarkozy told reporters as he greeted Barroso at the Elysee Palace in Paris. Sarkozy said he is seeking "an ambitious, co-ordinated plan".

German Chancellor Angela Merkel, whose government earlier this month rejected French suggestions to form a joint bank rescue fund, said the euro region will implement "the same toolbox of instruments".

Merkel, Sarkozy and their counterparts in the 15-nation euro region are being forced to shift stance as a deepening slide in financial markets has threatened to tip Europe into a prolonged recession. "Measures by euro-area governments to end the financial crisis have been uncoordinated and insufficient," said Juergen Michels, a Citigroup economist in London. "Increasing risks of an economic disaster might force governments to set up more co-ordinated and more comprehensive measures."

Luxembourg's Jean-Claude Juncker, who heads the Eurogroup of euro-region finance ministers, said in a statement yesterday that "no financial institution of systemic importance" can be allowed to fail. He said access to liquidity will be assured, efforts to unblock financial markets will be intensified and savings accounts of individuals will be protected. "I can assure you, you will not be disappointed, and it will be quite specific," he said.

Merkel said during a visit to France that Germany backs "coherent reaction in the euro-zone to the international financial crisis".

Portugal's finance minister announced yesterday that his government was offering a €20 billion (Dh98.47bn) state guarantee for banks endangered by the international financial crisis.

"In order to reinforce our financial system, the government has decided to launch an initiative guaranteeing the financial operations of credit institutions whose headquarters are in Portugal," Fernando Teixeira dos Santos said after a ministerial meeting on the crisis.

"These state guarantees will be up to €20bn," he added.