Euro rescue plan may be delayed again

REPORTING FROM LONDON -- First it was to have been presented on Sunday. Then the delivery day was pushed back to Wednesday. Now even that deadline may be in doubt.

Reports coming out of Brussels suggest that Europe's leaders, trying to craft a broad-based plan to combat the euro debt crisis, may not reach an agreement by Wednesday evening, as they had pledged to do. Negotiators are reportedly still having trouble nailing down details on how best to leverage Europe's $600-billion bailout fund, now seen as inadequate to deal with trouble spots such as Spain and Italy.

The Associated Press and the BBC are reporting that a meeting of European finance ministers Wednesday has been canceled. However, the summit of all 27 national leaders Wednesday evening is still scheduled.

The ongoing talks may yet produce an agreement by then, especially as the global markets, after rising in recent days in hopes that a "grand plan" would be unveiled, start to lose patience. Many analysts say that the European Union must act now to keep the crisis from completely slipping out of control.

The EU's plan is likely to include an increase in the bailout fund's firepower, a recapitalization of Europe's banking system and a reduction in Greek debt through steep write-downs on government bonds.

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-- Henry Chu

Photo: German Chancellor Angela Merkel and French President Nicolas Sarkozy speak to reporters Sunday at a European Union summit, where negotiations on a comprehensive solution to the euro debt crisis was the No. 1 topic. Credit: Thierry Roge / Reuters

NATO: Allies must address defense gaps, U.S. says

REPORTING FROM BRUSSELS -- NATO allies need to purchase more aerial refueling aircraft and surveillance drones, despite looming cuts in defense spending on both sides of the Atlantic, Defense Secretary Leon E. Panetta said Wednesday.

Panetta, in his first address to NATO since taking office in July, said the war in Libya was nearing a "successful" end but “would have had a difficult time getting off the ground” had the U.S. not provided drones and aerial refueling tankers to the alliance early in the bombing campaign.

The Libyan war exposed "capability gaps" in the alliance that the U.S. was forced to fill, Panetta said, even though the Obama administration had made it clear from the start that European governments would have to take the lead, as U.S. forces were heavily engaged in Afghanistan.

"Unfortunately, these capability gaps are being exposed at precisely the time when every defense minister in NATO, including myself, is dealing with great fiscal challenges at home," Panetta said. "There are legitimate questions about whether, if present trends continue, NATO will again be able to sustain the kind of operations that we have seen in Libya and Afghanistan without the United States taking on even more of the burden."

The message -- that NATO members need to spend more on new weapons systems at a time when many are considering deep cuts in military expenditures -- is the same one that former Defense Secretary Robert M. Gates delivered earlier this year on his final visit to NATO, though Panetta's remarks were in some respects more upbeat.