TOKYO: Europe has the firepower to fix its own debt problems, Japan's finance minister said Friday, as bloc leaders battled through a summit he said could "determine the course of the world economy in 2012".
With European Union leaders squabbling over how they should plug the gaping hole in the continent's finances, Jun Azumi told reporters they had no option but to act decisively.
"We want them to produce results that relieve markets and the world as it is a very important meeting that could determine the course of the world economy in 2012," Jun Azumi said, according to the website of the Nikkei newspaper.
He said Europe had the resources to solve its problems and should not in the first instance go cap-in-hand to the International Monetary Fund.
"You must not get it back to front," Azumi told a news conference after a regular Cabinet meeting, according to Dow Jones Newswires.
"What they need to do is clear. At least, it's clear that there is this issue of what Germany should do from now. You can't put those issues aside and try to fix the problems using the IMF."
"They have water to put their fire out. They have the power."
Azumi's comments came shortly before EU leaders ditched a plan to change the treaty that governs the 27-member bloc.
Britain, which has retained its own currency, walked out of the talks, leaving the 17 eurozone countries to search for a treaty change to affect only themselves.
Leaders Friday agreed to a new "golden rule" asking countries to set balanced budgets until debt levels drop.
But the agreement was one "in principle" only with political wriggle room remaining, diplomats said, despite proposed "automatic consequences" for eurozone countries that break the long-ignored rule that budget deficits must be under three percent of gross domestic product (GDP).
Countries' "annual structural deficit" could reach 0.5 percent of GDP, rather than zero, draft conclusions seen by AFP said.
The "structural" deficit is one calculated without factors such as debt repayments and the effects of the economic cycle.
However, several sticking points in the wider "fiscal compact", the first steps towards a tax-and-spend union, remained according to diplomats.
Difficult talks running overnight began on a sour note when comments by European Central Bank president Mario Draghi, who joined pre-summit negotiations with a restricted power group of Germany, France and leading EU officials, sent stock markets falling.
Draghi said hoped-for ECB action to buy up the sovereign bonds of debt-wracked countries was "limited" and "temporary".
Over the past two years, bond traders have driven up borrowing costs for a succession of eurozone countries.
Markets have been looking to see how European Union leaders would come up with a promised trillion-euro emergency firewall to save Italy or Spain if they became sucked in like Greece and others beforehand.
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