EU leaders seal bank plan to beat crisis

European leaders agreed Friday to police thousands of eurozone banks from next year as they sought to boost growth in their austerity-battered economies and create much-needed jobs. By the close of a two-day summit, France and Germany had patched up differences over how to beat the debt crisis, although the new watchdog for 6,000 lenders would come too late to re-float Spanish banks via a dedicated rescue fund. Leaders also hailed a 120-billion-euro ($155-billion) package of measures to try and kickstart a climb out of recession as social and political unrest hits Greece and Spain. Ideas included using proceeds from a proposed tax on financial transactions to tackle youth unemployment currently running at 50 percent. But difficult decisions remain to be taken in two more summits before Christmas, as Britain's David Cameron threatened to veto the European Union's budget for the rest of the decade. And conflicts in Syria and Mali, as well as Iran's disputed nuclear programme also figured among their chief concerns. But with market pressures considerably eased from before the summer, eurozone and EU leaders found common ground with the fresh commitment to bird's eye supervision led by the European Central Bank. This is supposed to anchor a re-designed economic and monetary union that leaders are beginning to believe, after three years in full crisis mode, will make the euro more attractive to EU states still outside the currency bloc. After an 11-hour session into the wee hours to reach the bank supervision deal, German Chancellor Angela Merkel said it was not about "trying to bargain for extra days or months," but rather ensuring a "solid legal framework" could be found by year-end. "We need democratic legitimacy," she said, plus further clarity on dealing with eurozone banks in non-euro territories, especially the global financial centre of London, and vice-versa. "There will not be a retroactive direct recapitalisation," she said, though, meaning that bailout aid for Spanish banks labouring under a burst property bubble would add to Madrid's already large debt pile. But it will be possible in the future, she said, adding: "I think, when the supervisory system is in effect, we will not have any more problems with the Spanish banks. At least, that is my hope." As she highlighted "considerable imbalances" across eurozone and EU economic performance as the real issue, albeit masked by "calm" on markets, French President Francois Hollande said it was "a good deal" to be getting on with. But he resisted a German push to change the EU treaty next year after a December summit that is meant to nail down "concrete" moves to tighten centralisation of economic policy. He also floated a plan for the fruits of a financial transactions tax (FTT) that an inner cabal of EU states want to start next year to be used to get a lost generation of European youths into employment. The money "could be dedicated to youth training," Hollande said. He also urged a "quick decision" on the resumption of Greece's long-paused bailout, leaders' praise suggesting a more sympathetic hearing for a two-year extension Athens wants on its commitments, while urging the conservative-led coalition government to stick to the goals of its debt bailout. "The country's reserves are only sufficient until November 16," Greek Prime Minister Antonis Samaras said, while adding also that "the climate has changed" among partners in Brussels. Some 30,000 protesters had gathered on that occasion in Athens, Merkel emerging as a hate-figure for protesters. Hollande, who will follow Merkel in visiting Greece himself, also warned against "adding austerity to austerity" by imposing harsh conditions on Spain if it were to request a full sovereign European bailout. And in a sign that social unrest is far from over, Spain's main unions called a general strike for November 14.