The leaders of France, Germany, Italy and Spain agreed to push for a growth package worth up to $163 billion at a key European Union summit next week aimed at kick-starting the economy and safeguarding the currency bloc.
President Francois Hollande of France, German Chancellor Angela Merkel, Spanish Prime Minister Mariano Rajoy and Italian Premier Mario Monti, playing host, provided few concrete details beyond agreement on pursuing a financial transaction tax -- something that Germany has championed.
Perhaps the biggest breakthrough of the brief summit was Merkel's acknowledgement that austerity alone won't cure the euro's woes. Merkel has come under increasing pressure to give ground on key pro-growth measures.
"We say that growth and solid financials are two sides of a coin. Solid financials are not sufficient," Merkel said.
Monti, who met with his fellow leaders at a government villa in Rome, is trying to build a bridge between Merkel's insistence on fiscal discipline and the focus on growth by recently elected Hollande. He acknowledged that steps taken so far have not been sufficient, and that markets and European Union citizens alike need to view the euro currency as "irreversible."
"We maintain that if four countries as important and diversified as ours can find a convergent line, this can help force a strong consensus at the EU Council," Monti told a closing news conference.
Monti has warned of severe consequences for the 17 countries that use the euro and the world economy if next week's summit fails.
"A large part of Europe would find itself having to continue to put up with very high interest rates, that would then impact on the states, and also indirectly on firms. This is the direct opposite of what is needed for economic growth," Monti said in an interview with six European newspapers published Friday.
The $163 billion growth package discussed at the Rome meeting could include funds from unspent European Union structural funds, the European Investment Bank and European "project bonds" -- debt sold to finance cross-border infrastructure projects.
The proposed financial transaction tax would charge banks 0.1 percent of the value of sales of stocks or bonds, and 0.01 percent per derivative contract with the proceeds going to fund future bank bailouts. However, at a meeting of finance ministers from the 27 countries in the European Union in Luxembourg Friday, only 10 member countries were prepared to support the idea.
The Rome meeting caps an intense week for Europe in which markets have been roiled on fears that the region's governments will not come up with adequate measures to fight the debt crisis and that Spain and Italy might soon need bailouts that the rest of the eurozone could not afford.
There are worldwide fears that an economic crack-up in Europe could drag down the entire global economy. Europe is a substantial trading partner with the rest of the world. Any deep recession in Europe will be felt in the order books of other leading economies -- including the United States.
At a meeting of Eurozone finance ministers in Luxembourg Thursday night, the head of the International Monetary Fund warned that the euro was under "acute stress" and urged leaders to consider measures -- including jointly issuing debt -- to alleviate the pressure on the region's debt-stricken members.
Germany has strenuously opposed the issue of joint debt -- or eurobonds -- because, while it would immediately ease pressure on countries like Spain, German taxpayers would be put on the hook for foreign debts and Germany's cost of borrowing would increase.