Euro deal not enough to solve crisis

DUBLIN: The deal to draft a new treaty for deeper economic integration in the euro zone is not going to be enough to solve the bloc's debt problems, an Irish minister said on Sunday, warning events will overtake leaders in coming weeks.

Under the new treaty plan agreed on Friday, 26 of the European Union's 27 countries agreed to pursue a tougher budget discipline regime with automatic sanctions for deficit sinners in the single currency area.

The outcome of the two-day EU summit left financial markets uncertain whether and when more decisive action would be taken to stem the crisis, and Ireland's transport minister Leo Varadkar said they would likely find out in a matter of weeks.

"I suspect events will overtake us over the next few weeks. Fiscal co-ordination is a good idea, and it's good that's happening, but it's not going to be enough to solve the problem that we have," Varadkar told national broadcaster RTE.

"We are effectively a federation now that we have the same currency, but we don't have a central bank that acts like a federal reserve."Ireland has called for the European Central Bank (ECB) to act as a lender of last resort to avert the debt crisis a move staunchly opposed by the ECB itself and Germany.

Ireland's European Affairs Minister told Reuters on Friday she expected the ECB to act more decisively in the weeks ahead.

After Britain refused to join the other 26 countries in a fiscal union, Varadkar sought to ease concerns that a financial transaction tax could be introduced in the new bloc and not Britain, giving Ireland's neighbours a competitive advantage.

Ireland is a major centre for funds administration in Europe and the government has insisted that any such tax should apply to the entire EU, not just euro zone members.

"I know lot of people have concerns about Britain not being in the new fiscal compact, and concerns about financial taxes, but you can be pretty sure Paris wants to protect its financial sector as much as Dublin does, but there'll be nothing like that if the Brits aren't part of it," Varadkar said.