U.S. President Barack Obama spoke with German Chancellor Angela Merkel by telephone Wednesday on ways to resolve Europe's debt crisis which is affecting the global economy.
The White House said President Obama and the German chancellor agreed on the need to find a lasting and credible solution for the eurozone crisis. The U.S. president has repeatedly urged European leaders to do what is necessary to fix the crisis as soon as possible.
His latest call comes ahead of a Thursday summit of European Union leaders in Brussels.
Germany and France are pressing European leaders to act quickly to resolve the continent's debt crisis and save the common euro currency.
Chancellor Merkel and French President Nicolas Sarkozy detailed their plan Wednesday to end the two-year debt contagion in a letter to European Council President Herman Van Rompuy. Their plan calls for automatic penalties against governments that violate budget limits, a unified corporate tax rate and a new financial transaction tax.
The two leaders acted under additional pressure from the credit agency Standard & Poor's, which warned Wednesday that it could cut the credit rating of the 27-nation bloc and some large eurozone banks.
On Monday, the agency said it may downgrade 15 of the 17 nations that use the euro, including Germany and France. Now it says that if eurozone countries are downgraded, the whole bloc will have its rating cut down by one notch. The agency also said it has put on its watch the performance of large European banks such as France's Societe Generale, Italy's UniCredit and Germany's Deutsche Bank.
Ms. Merkel and Mr. Sarkozy, who oversee Europe's two largest economies, said new EU treaty provisions should be ready for adoption by March.
But Britain, which does not use the common euro currency, has indicated that it may not be willing to sign on to the new EU treaty provisions. Prime Minister David Cameron said earlier this week that he will defend Britain's interest at the summit in Brussels.
All 27 EU nations have to agree on any changes to their treaty. If other non-eurozone countries follow Britain's example, only the 17-nation bloc that uses the euro might agree to more centralized authority over budgets.
U.S. Treasury Secretary Timothy Geithner, fearful of the effects of a euro collapse on the fragile American economy, is on a three-day trip to European capitals to prod officials to adopt strong measures.
After meeting with French Finance Minister Francois Baroin in Paris, Geithner expressed confidence that the European officials will move to control government spending, create new economic growth and calm jittery financial markets worried about governments defaulting on their debts.
