December 16, 2010 / 7:38 PM / 8 years ago

UPDATE 1-EU leaders agree to create permanent crisis fund

* EU leaders agree on need for treaty change

* Permanent crisis resolution mechanism to work from 2013

(Adds details, quotes)

BRUSSELS, Dec 16 (Reuters) - European Union leaders agreed at a summit on Thursday to make minor changes to the EU’s governing treaty to set up a permanent mechanism from mid-2013 to solve sovereign debt problems.

The leaders agreed to insert two sentences into the treaty, a draft summit statement showed.

“The member states whose currency is the euro may establish a stability mechanism to be activated if indispensable to safeguard the stability of the euro as a whole,” it said.

“The granting of any required financial assistance under the mechanism will be made subject to strict conditionality.”

EU Council President Herman Van Rompuy wants member states to start work next year on securing ratification of the changes so that the fund can be active from mid-2013.

The permanent fund, to be called the European Stability Mechanism (ESM), will replace a temporary system — a 750 billion euro ($1 trillion) emergency loan facility created by the EU and the IMF in May.

In their draft statement, the EU leaders agreed the ESM would “provide the necessary tool for dealing with such cases of risk to the financial stability of the euro area as a whole as have been experienced in 2010.”

They also agreed that EU member states that are not part of the euro zone can be involved in the ESM “if they so wish”.

“They may decide to participate in operations conducted by the mechanism on an ad hoc basis,” the draft statement, or summit conclusions, said.

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