BRUSSELS — The eurozone's 17 finance ministers converged on EU headquarters Tuesday in a desperate bid to save their currency — and to protect Europe, the United States, Asia and the rest of the global economy from a debt-induced financial tsunami.
The ministers were discussing ideas that only weeks ago would have been taboo: countries ceding fiscal sovereignty to a central authority, an elite group of euro nations that would guarantee one another's loans but require strong fiscal discipline from members.
Changes to existing rules are being touted as one way the eurozone can get out of its debt crisis, which has already forced Greece, Ireland and Portugal into international bailouts and is threatening to engulf bigger economies such as Italy, the eurozone's third-largest.
If Italy were to default on its €1.9 trillion ($2.5 trillion) debt, the fallout could break up the currency used by 322 million people and send shock waves throughout the global economy.
German Chancellor Angela Merkel reiterated her support for changes to Europe's current treaties in order to create a fiscal union with binding commitments by all euro countries.
"Our priority is to have the whole of the eurozone to be placed on a stronger treaty basis," Merkel said Tuesday in Berlin. "This is what we have devoted all of our efforts to; this is what I'm concentrating on in all of the talks with my counterparts."
Merkel acknowledged that changing the treaties — usually a lengthy procedure — won't be easy because not all of the European Union's 27 member states "are enthusiastic about it." But she dismissed reports that the eurozone, or some groups of nations, might go ahead with a swifter treaty between their governments.
Countries outside the eurozone heaped on the pressure, knowing that if the euro fails, bank lending would freeze worldwide, stock markets would likely crash and Europe's economies would crater. The pain would spread to U.S. and Asia as their exports to Europe collapse.
President Barack Obama said Europe's failure to resolve its debt crisis would complicate his own efforts to create American jobs. And even Poland, a non-eurozone nation historically wary of German dominance, appealed for help.
"I will probably be the first Polish foreign minister in history to say so, but here it is," Radek Sikorski said in Berlin. "I fear German power less than I am beginning to fear German inactivity."
"The biggest threat to the security and prosperity of Poland would be the collapse of the eurozone," Sikorski added. "And I demand of Germany that, for your own sake and for ours, you help it survive and prosper."
Looking ahead, Europe has enormous debts that must be refinanced in the next year — €638 billion ($852 billion) coming due in 2012, of which 40 percent needs to be refinanced in the first four months, according to Barclays Capital.
On their way into the meeting, finance ministers were hopeful of at least one concrete action — releasing €8 billion ($10.7 billion) in the next installment of Greece's bailout loan, without which the country will go bankrupt within weeks. The EU had demanded, and received, letters from all the leaders of Greece's main political parties backing tough austerity measures to get the loan.
But some finance ministers acknowledged that they probably won't reach their goal of increasing the European Financial Stability Facility — which is supposed to be a firewall against financial contagion — from €440 billion ($587 billion) to €1 trillion ($1.3 trillion).
"It will be very difficult to reach something in the region of a trillion," said Dutch Finance Minister Jan Kees de Jager. "Maybe half of that."
He said more money might come from the International Monetary Fund — but more money in itself would not fix Europe's basic problem.
"The fundamental problem is that the reforms have been insufficient, notably in southern European nations," De Jager said.
Bond markets appear to agree with him. Italy's borrowing rates shot up Tuesday above 7 percent, an unsustainable level that forced the three smaller EU nations to seek bailouts. Markets rose generally for the second day on hopes that the enormous pressures on the European ministers would produce some results.
At the top of Tuesday's agenda is finding a means to more fully integrate the eurozone's disparate nations — ranging from powerful Germany to tiny Malta — both politically and financially. And the ministers must do it fast, without the delays caused by democratic niceties like referendums.
France's finance minister, Francois Baroin, said Tuesday on France-Info radio that countries should integrate their budgets more closely and monitor one another's spending — and France and Germany will proposals ways to do that.
The 17 ministers are expected to discuss jointly issuing so-called eurobonds — an all-for-one, one-for-all way of having the different countries guarantee one another's debts.
Right now each nation issues its own bonds, meaning that while Italy pays above 7 percent, Germany pays about 2 percent. Having stronger countries like Germany stand behind the general European debt would lower Italy's borrowing rates — and perhaps help it avoid a debt spiral toward bankruptcy. At the same time, it would raise Germany's borrowing costs.
The head of Germany's exporters association backed an even more radical solution — urging that Greece and Portugal leave the eurozone. BGA association president Anton Boerner told The Associated Press that the radical move would be the only way for those countries to spur the growth needed to overcome their crippling debts.
Financial analysts were doubtful that new cash for Greece and mere talk about the stability fund would bring relief to Europe.
"The marginal impact of these bits of 'good news' should be limited at best and investors will still cast a nervous eye towards this week's bond auctions and eurozone yields in general may not find too much respite," said Geoffrey Yu, an analyst at UBS.
Angela Charlton in Paris, Melissa Eddy and Juergen Baetz in Berlin, Pan Pylas in London, and Greg Keller and Raf Casert in Brussels contributed to this report. Don Melvin can be reached at http://twitter.com/Don_Melvin