Eurozone crisis: Leaders ready for \'do-or-die\' summit

European Union officials are preparing for a key summit in Brussels, where they will be trying to clinch a deal on how to tackle the eurozone debt crisis. The two-day talks have been described by some analysts as do-or-die for the 17 eurozone nations. Germany and France are pushing for new EU treaties, saying stricter fiscal rules should be enshrined there. But European Council President Herman Van Rompuy is offering a plan which only requires amending the treaties. The 10 non-eurozone members of the 27-member EU, including Britain, are concerned they may become isolated if the eurozone nations - driven by Berlin and Paris - decide to move to a new treaty on their own. Ahead of the summit, all the signs are that it could be a bruising affair, the BBC\'s European affairs correspondent Chris Morris in Brussels reports. On Wednesday, US President Barack Obama discussed the eurozone crisis with German Chancellor Angela Merkel during a telephone call. The White House said both leaders agreed that any solution must be lasting and credible. On Thursday morning, US Treasury Secretary Timothy Geithner is due to meet new Italian Prime Minister Mario Monti in Rome. This is the latest in a series of talks Mr Geithner is holding with eurozone leaders as American concerns over the crisis deepens. Merkel-Sarkozy letter The key proposal on the agenda of the gathering in the Belgian capital later on Thursday ch wants to join them. So the intricacies of treaty change will loom large over this summit, but there is also a bigger picture. The EU needs to rebuild market confidence around the eurozone, and offer better protection to countries like Italy which have huge debts. That means more work on creating a financial firewall to shield countries in trouble, and it means making sure that member states who have announced savage austerity programmes actually implement them. Without all of that, the eurozone will remain in real peril. Mrs Merkel and French President Nicolas Sarkozy are seeking to enforce this by changing the existing EU treaties. \"We are convinced that we need to act without delay,\" the two leaders wrote in a joint letter to Mr Van Rompuy, adding that the new treaty was needed by March. The Merkel-Sarkozy letter also called for \"a renewed contract between the euro area member states\". The German-French plan is based on the following key provisions: the European Commission to have the power to impose penalties for nations that run excessive budget deficits all 17 eurozone nations should amend their national legislation to require balanced budgets the eurozone countries to have common corporation and financial transaction taxes any future bailouts would not require private investors to absorb part of the costs, as happened in the Greece case But an EU commissioner publicly derided the idea that sanctions alone could compel euro member states to abide by the rules. \"Automatic sanctions are a joke. Fiscal union needs collective, democratic decision-making that can respond to challenges & manage agg. [aggregate] demand,\" tweeted EU Social Affairs Commissioner Laszlo Andor. He told the BBC that smaller EU states were disgruntled at the dominance of France and Germany in the decision-making process. Alternatively, Mr Van Rompuy is offering a fast-track \"fiscal compact\" that does not need lengthy ratification by parliaments or national referendums. In an interim report, Mr Van Rompuy, who will be chairing the summit, argues that the necessary reforms can be adopted simply by amending a protocol - a procedure that needs national consensus but does not require substantial changes to the EU treaties. This, Mr Van Rompuy argues, would speed up the implementation of reforms and remove any potential political complications. However, a senior German official dismissed as a \"trick\" talk of introducing a fiscal agreement for the eurozone within existing treaties. Speaking to the BBC on condition of anonymity, the official also admitted he was more pessimistic than a week ago about reaching a deal in Brussels. British \'safeguards\' Paris and Berlin appear to be pushing through more radical measures, correspondents say, and if all 27 EU members cannot agree, then they are prepared to work towards a new treaty involving the eurozone bloc and any other country that wants to join. Such a move could leave Britain - a non-eurozone EU member - feeling more isolated. UK Prime Minister David Cameron said on Wednesday that he would seek safeguards for London\'s powerful financial sector at Friday\'s summit in Brussels. \"The more eurozone countries ask for, the more we will ask for in return,\" he said. Mr Cameron argues that a financial transaction tax would work only if adopted globally. Ahead of the summit, positions appear to be hardening, our correspondent says. Such is the depth of the crisis surrounding the eurozone that the main focus is not on the EU solidarity but on restoring market confidence in whatever way proves possible, he adds. Earlier this week, Standard & Poor\'s put all eurozone nations on credit watch \"with negative implications\". The ratings agency said the decision was prompted \"by our belief that systemic stresses in the eurozone have risen in recent weeks to the extent that they now put downward pressure on the credit standing of the eurozone as a whole\".