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From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.
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And I'm Lynn Neary. European officials are moving ahead today with a new package of economic reforms. That's after a long night of talks in Brussels. The effort to address the unyielding debt crisis has threatened European unity and one important country, the United Kingdom, has refused to sign off on the reforms. More on that in a moment, but first we hear about the new rules from NPR's Jim Zarroli.
JIM ZARROLI, BYLINE: The European Union already has rules that bar its member countries from running big budget deficits. But the rules have rarely been enforced, which is why countries like Greece, Ireland and Italy now find themselves with much higher debts than they can pay off. Under the rules unveiled this morning, EU countries will have to adhere to budget caps or they will face strict sanctions. The president of the European Council, Herman Van Rompuy, said the rules were a big step forward in the effort to address Europe's troubles.
HERMAN VAN ROMPUY: For the short term, we agreed on immediate action to overcome the current difficulties and for the longer term, we agreed on the new fiscal compact for the eurozone.
ZARROLI: By an enforcing stricter budget caps, European officials are hoping to send a message to the markets that the days of profligate spending are over. Investors have been fleeing the bond markets in growing numbers because they no longer believe countries such as Italy and Spain can pay off their debts. To show how serious they are about reforms, some leaders, especially Germany's Angela Merkel, had hoped to have the new provisions placed in the EU treaty, but Britain refused to go along with that.
So countries will be asked to amend their laws, and even their constitutions, to include the changes. Sony Kapoor is managing director of Re-Define, a London think tank.
SONY KAPOOR: So they are tying themselves up in golden handcuffs, saying that by enshrining this in the primary law, we are going to be fiscally responsible.
ZARROLI: Because the effort to amend the EU treaty failed, the new provisions won't have the same force of law. Kapoor says there are questions about how the new rules can be enforced and how sanctions will be imposed on rule-breakers.
KAPOOR: This could unwind. This would, at best, take several months, if not years, for countries to actually execute this, but they have made the intention very clear. And that is something.
ZARROLI: Kapoor says for all the unanswered questions, today's agreement marks a real step forward for the eurozone. There has been talk for weeks that the eurozone would break up and that countries like Greece might be forced to leave. But Kapoor says, in the end, the opposite happened.
KAPOOR: This summit was marked by a remarkable degree of unity and putting a serious face for the world to see.
ZARROLI: The summit follows a long period of rising interest rates, not just for troubled countries like Greece, but even for wealthier ones like France and the Netherlands. This has finally made European leaders take the problem seriously, says Zsolt Darvas of the Brussels think tank, Bruegel.
ZSOLT DARVAS: More and more politicians understand that the stakes are extremely high now. Clearly, the probability of a horrible financial crisis with devastating consequences has increased.
ZARROLI: But European leaders also made clear today that there's a limit to how far they will go. They said they would put an additional 200 billion euros into a stabilization fund, but that is still well short of what's needed to prop up debt-laden governments. And officials refuse to lift the cap on the lending capacity of the eurozone's bailout fund. Germany has argued that making loans too available would encourage deficit spending and, in the end, it stuck to that position. Jim Zarroli, NPR News, Brussels. Transcript provided by NPR, Copyright NPR.