EU leaders mull 'light' treaty change

(BRUSSELS) - The European Union mulled Thursday German and French demands for a "limited" rewrite of the bloc's main treaty in efforts to defend its economy against future financial crises.

Diplomatic sources said the EU's 27 leaders, meeting for a two-day summit, were looking at a proposal for "limited" treaty change enabling Germany, the bloc's biggest economy, to back a permanent rescue fund for member states in financial trouble.

The proposal, seen by AFP, was submitted by EU president Herman Van Rompuy and was being discussed over dinner.

It calls on European leaders to back the establishment of a fund -- known as a permanent crisis mechanism -- "to safeguard the financial stability of the euro area as a whole".

It also invites Van Rompuy to undertake consultations on a "limited" treaty change required to that effect, with more talks set for a December summit and a final decision on "light" treaty change to come into force by mid-2013.

That is the expiry date for a temporary fund set up in May to reassure markets in the aftermath of the Greek crisis.

Germany contributed the lion's share of eurozone commitments to the 440-billion-euro European Financial Stability Fund, but fears opposition from its powerful constitutional court to further aid failing a change in the EU's governing Lisbon Treaty.

The treaty contains a clause banning members from bailing each other out, but EU leaders greeted Merkel's call for a rewrite warily given it took a decade of hard-fought negotiations and failed referendums to enact it, just last December.