EU to fix euro rescue fund size 'without delay': president

(COPENHAGEN) - European Union president Herman Van Rompuy said Monday that EU leaders will tackle "without delay" the contentious question of how big to make new eurozone rescue fund due to enter force this summer.

Speaking in Denmark, one of two states with an opt-out from the debt-ravaged eurozone and whose government currently holds the EU's rotating six-month chair, Van Rompuy said that heads of state and government will tackle "the adequacy of the size of the ESM without delay."

An EU source told AFP the debate would likely take place "in March at the latest."

In May 2010, one week after leaders agreed a historic but ultimately inadequate bailout of Greece, the EU set up a temporary rescue fund called the European Financial Stability Facility (EFSF).

They eventually said it would be able to lend up to 440 billion euros ($560 billion) and was to be replaced as of 2013 by a permanent fund, the European Stability Mechanism (ESM), with a lending capacity of 500 billion euros.

A treaty establishing the ESM will now "enter into force in July 2012, sooner than scheduled," Van Rompuy said after talks with Danish Prime Minister Helle Thorning-Schmidt.

The problem is, at the EU's last summit in December, some countries wanted to see what remains of the EFSF after bailouts of Ireland and Portugal, with a second Greek bailout still formally on the cards, added to the ESM pot.

That would mean the overall available resources reaching perhaps 750 billion euros -- on top of another 200 billion separately promised via country loans to the International Monetary Fund.

Backers of this approach think that might be enough to convince sceptical bond and other financial markets that Europe will cover even the sort of giant rescue that would be required were Italy, Spain or France to fall into the same trap as Greece.

Combining the monies even temporarily, though, is something Germany, the biggest individual contributor, has consistently resisted.

Leaders are slated to hold their next summit in Brussels on January 30, with the next formal gathering scheduled for March 1-2.