European heads of state met again in Brussels this week. It was the 18th summit since the debt crisis began some two years ago. But for the first time, observers say there was no air of crisis surrounding the gathering. NPR's Eleanor Beardsley sends this report.

HERMAN VAN ROMPUY: The treaty on stability, coordination and governance in the economic and monetary union.


ELEANOR BEARDSLEY, BYLINE: That's European Union head Herman van Rompuy introducing the EU's new baby and what he says is its best hope for the future - a treaty that will ensure fiscal discipline among member states and act as a barrier to future Greek-style meltdowns. It mandates that members keep their deficits under 3 percent of GDP and balance their budgets. European commission head Manuel Barroso hailed a new era.

MANUEL BARROSO: I think it's a real signal that we will not return to the bad old days of fiscal irresponsibility. It's also a very important political statement on the irreversibility of the euro.

BEARDSLEY: By restoring confidence in the eurozone, both within and without, leaders say the new treaty will help foster growth and job creation, which seems to have become the bloc's new mantra after years of budget slashing.

But with unemployment in Europe at a 10 year high and austerity measures intensifying the economic slowdown, leaders aren't quite sure how to reconcile the need to stimulate growth with the discipline required to fulfill the new fiscal pact.

In a recent interview with NPR, International Monetary Fund head Christine Lagarde said there is no consensus when it comes down to how to grow an economy.

CHRISTINE LAGARDE: How do you fuel that growth? Do you fuel it by massive public spending, stimulus packages? Or do you fuel it by intelligent, pointed structural reforms that will really unleash growth by market players?

CHANCELLOR ANGELA MERKEL: (Foreign language spoken)

BEARDSLEY: Chancellor Angela Merkel, whose country powers the eurozone, said the signing of the fiscal compact had opened a new chapter in overcoming the crisis. The German leader also attributed the recent calm to a $1.3 trillion infusion of capital into eurozone banks by the European Central Bank.

Despite the clear skies over Brussels this week, analysts say there are clouds on the horizon. Germany opposes building a bigger firewall against Europe's debt contagion. So the issue of beefing up the European stability mechanism was put off until mid March. And European leaders have delayed approval of more than half of Greece's $170 billion bailout money until private bondholders agree to take losses of more than 70 percent in a debt swap.

Eleanor Beardsley, NPR news, Brussels.


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