Other countries eagerly await U.S. immigration reform

They design our electronics, harvest our food, staff our research labs and care for our children. Immigrants -- legal and illegal, skilled and unskilled -- by all accounts are vital cogs in the wheel of the U.S. economy, and the money they send back to their families improves the quality of life throughout their homelands.

So why, when both sending and receiving countries benefit, is the quest for comprehensive immigration reform in the United States so politically divisive and often pushed to the legislative back burner?

Immigration policy experts say the caustic partisan debate over who can stay and who must go has been ratcheted up by the lingering joblessness inflicted by the Great Recession and the searing spotlight of Campaign 2012 that illuminated only candidates' points of contention rather than those of convergence.

Now that the election is over and President Obama purportedly is beholden to the 71% of Latino voters who helped propel him to a second term, the more sober analysts of immigration dynamics are predicting that lawmakers of all political stripes will make a priority of devising more fair, efficient and mutually advantageous practices for integrating foreign labor.

"Immigrants operate on supply and demand, like everyone else. If there is a huge supply of jobs, they will come to the United States and look for them. If, as the case has been recently, there is not a huge supply of jobs or work opportunities are declining, then they either don’t come here or they go back," said S. Lynne Walker, vice president of the Institute of the Americas and an immigration policy analyst for more than 20 years. She pointed to a Pew Hispanic Center report in April that tracked the steady decline of undocumented workers, who have been kept at bay by the recession.

Quebec separatist party riding wave of voter dissatisfaction

This post has been updated. See note below.

When the separatist Parti Quebecois burst on the political scene 40 years ago, financial institutions and global corporate headquarters fled Montreal for neighboring Ontario in fear of the economic disaster predicted if Quebec were to secede from the Canadian federation.

In 1995, when the party again gained control of the provincial government, voters defeated a referendum on separation by such a small margin -- the difference was 1 percentage point -- the province again suffered a loss of business investments that killed jobs, dropped property values and depressed the Canadian dollar for much of that decade.

So why, in an age of relative prosperity that is the envy of the recession-racked world, are Quebec voters again surging to the side of Parti Quebecois and its nationalist platform for more sovereignty and French language dominance? As the Ottawa Citizen warned in an editorial Tuesday, a victory for Parti Quebecois leader Pauline Marois in Tuesday's legislative elections would give her "a chance to turn her province into the Greece of North America and slow Canadian progress for many years."

Votes were still too close to call in some hotly contested districts, or "ridings" as they are known in the province, but Canadian Broadcasting Co. declared Parti Quebecois the winner and Marois poised to become Quebec's first female premier. Incumbent Jean Charest and his Liberal Party colleagues lagged by at least 10 seats in the winner-takes-all district contests. Parti Quebecois could end up heading a minority government, though, as a relatively strong third-place finisher, the Coalition Avenir Quebec, appeared to deprive the separatists from getting at least 63 seats for an outright majority.

[Updated 9:30 a.m. Sept. 4: In a possible sign of the tensions that can flare on the separation issue, shots were fired during Marois's victory speech shortly after midnight, prompting security officers to whisk the party leader off the stage. Police said they were questioning a man detained at the scene who was wearing ski mask and blue bathrobe. Marois was unhurt, but a 48-year-old man was killed and another man wounded, Quebec police reported.]

Support for separation has fallen dramatically since two previous referendums found insufficient voter interest in going it alone. A 1980 ballot measure failed with only 40% in favor, and the vote 15 years later narrowly missed with 49.5% backing. Today, only about 28% of the electorate wants to separate from Canada, according to a recent poll published by La Presse of Montreal.

What has brought voters back to the Parti Quebecois fold, says McGill University law and politics professor Daniel Weinstock, is Canada's long tradition of "democratic alternance in power," a cyclical sweeping out of the governing echelons.

"After three or four terms in power, a party gets complacent. Corruption sets in and it gets too cozy with people it shouldn’t be getting cozy with. About a quarter of Parti Quebecois voters say they just want change," said Weinstock, alluding to a scandal involving the building trades and organized crime that eroded support for Charest and the Liberal Party.

Quebec has also been roiled this year by massive student unrest in protest of tuition increases, which flared into ugly confrontation between police and demonstrators. Thousands were arrested this spring, and new restrictions imposed on public demonstrations have angered free-speech advocates across Canada.

More than an opportunity to raise the separatist cause again, Marois has appealed to voters with populist pledges to boost taxes on wealthy individuals and charge higher mining royalties on multinational extractors to raise revenue for public projects. She has also called for making it more difficult for foreign companies to buy out Canadian competitors, like the $1.8-billion offer from home improvement giant Lowe's of North Carolina for Quebec-based chain Rona Inc. that could imperil thousands of Canadian jobs, mostly in the Francophone province.

Under pressure from party hardliners, Marois has demanded provincial autonomy in foreign affairs and immigration policy and called for making French the exclusive language of education at the community college level. French already has that status in primary and secondary school teaching.

Marois made clear on the campaign trail that getting Quebec's finances in order would be the first priority if her party regains power. But she also reiterated Parti Quebecois' separatist aim in vowing to hold a referendum "tomorrow morning" if polls show majority support.

Finn Poschmann, vice president of research at the C.D. Howe Institute, an economic and social policy think tank in Toronto, says separation makes no sense economically for Quebec and Marois has said she would push for a third vote on it only when the measure is assured of passage.

Still, the notion of independence has an emotional appeal for many in Quebec, Poschmann said.

"It's the sovereigntist ideal, that if only the province could have more control over its destiny that everything will get better," he said. "There are going to be significant groups of people, particularly in rural areas and among youth, who are true believers in the separation program. But that is not the dominant force in Quebec politics."

Canadian markets and currency have weathered the latest Parti Quebecois rise without the nerves and panic of previous political shifts in Quebec, probably because analysts see little imminent threat of another secession vote, said Poschmann.

But he points out that the campaign promises made by Marois -- higher income taxes for  big earners and $1 billion in new public spending -- would be enough to damp investors' enthusiasm for Quebec and Canada as a whole even if the separation issue has been relegated to the back burner.

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Photo: Parti Quebecois Leader Pauline Marois is whisked off stage as she delivered her victory speech in Quebec on Tuesday. Police were not immediately able to provide details but party organizers informed the crowd that there had been an explosive noise and they needed to clear the auditorium. Credit: Paul Chiasson/Associated Press

After second Mexican mining disaster, critics call for stronger regulation

 

MEXICO CITY -- In the wake of another fatal coal mining disaster in the Mexican state of Coahuila, critics are ramping up their call for stronger regulation of an industry that the local bishop claims is sending workers into “death trap” conditions.

Six men were killed Friday morning when 100 tons of rock and coal collapsed, trapping them in a mine near the town of Muzquiz. In late July, an explosion at another nearby mine killed seven workers. The national miners’ union claims that 200 miners have died in Coahuila since 2006.

The mine’s owner, Altos Hornos de Mexico, has claimed that the modern safety features at the site allowed them to evacuate 285 miners after the collapse.

“But the result is persistently the same,” the union said in a statement. “The mine workers are the evident victims of the lack of foresight, lack of sensitivity and criminal irresponsibility of the mining companies, big or small, that don’t establish adequate security measures for the protection of their workers.”

Raul Vera, the Roman Catholic bishop of Saltillo, said in a radio interview that many miners were “working in 19th century conditions.”

“The mines are a death trap,” he said.

Vera and other church leaders have accused the government of being reluctant to impose tougher regulations on the industry for fear of upsetting foreign mining companies operating in the state.

The governor of Coahuila, Ruben Moreira, and others have called on the federal government to reduce the taxes on the methane gas that is often found in coal mines -- and is often a source of the explosions that make the work there so dangerous. Moreira and others hope that with lower taxes, companies will have greater incentive to safely capture the gas and sell it, instead of letting it escape, as it often does now, into the atmosphere.

The newspaper Vanguardia, in Saltillo, the state capital, reported Monday that a measure to reduce the taxes on coalbed methane gas was introduced in the Mexican Chamber of Deputies in October, but has not been acted upon.

“What is needed are not speeches delivered a thousand times, or promises that have proven to be in vain again and again,” read an editorial published in the paper Monday. “What is required are real actions for creating a different reality -- a reality in which human life is worth more than the earnings generated by coal.”

-- Richard Fausset

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Photo: A handout picture provided by La Voz de Sabinas shows rescuers at an earlier collapse July 25 at the Deborquez mine in Muzquiz, Coahuila state. Seven miners were killed. Mauricio Garcia / European Pressphoto Agency

Mexican retailer lashes out at losing presidential candidate

MEXICO CITY -- One of Mexico's largest retailers has been unwillingly dragged into the hullabaloo over just how dirty the nation's recent presidential election was, and now it's yelling "ya basta!" -- enough already -- and accusing the runner-up of promoting protests at its stores that have been marked by "aggressiveness and violence."

The retail giant Soriana, which operates more than 500 grocery stores, quickie marts and Wal-Mart-style megastores, became entangled in the country's impassioned postelectoral narrative soon after the July 1 vote. At that time reports surfaced that supporters of the victorious Institutional Revolutionary Party, or PRI, were jamming the outlets' aisles in the hopes of redeeming prepaid Soriana gift cards that the PRI had allegedly given them.

The PRI candidate, Enrique Peña Nieto, bested left-wing candidate Andres Manuel Lopez Obrador by 6.6 percentage points. But Lopez Obrador and his Democratic Revolution Party, or PRD, allege that the PRI engaged in vote buying with a debit-card scheme. They have also alleged that the PRI laundered money and spent more than federal campaign limits.

The PRI has denied wrongdoing, and accused the left of its own campaign shenanigans. Lopez Obrador, meanwhile, has called for the election to be annulled and filed a formal complaint with the electoral tribunal, which has until Sept. 6 to issue a ruling.

General warns of dramatic increase in cyber-attacks on U.S. firms

ASPEN, Colo.  -- Computer  intrusions by hackers, criminals and nations against U.S. infrastructure increased seventeenfold from 2009 to 2011, the nation’s chief cyber defender says, and it’s only a matter of time before such an attack causes physical damage.

Gen. Keith Alexander, who heads  the National Security Agency and the U.S. Cyber Command, revealed the statistics in a rare public interview Thursday at the Aspen Security Forum, a gathering of national security officials. He called for passage of legislation being debated by the Senate that would set up a voluntary system for companies to shore up their computer defenses.

The NSA eavesdrops on communications around the world, and it also monitors cyber-attacks. U.S. Cyber Command is responsible for offensive cyber operations.

Alexander did not say how many attacks happen each year against critical infrastructure, such as electrical, water, chemical and nuclear plants. Such intrusions are typically designed  to probe defenses and lay the groundwork for a destructive attack.  Many plants and factories are run by networked industrial control systems, so an attacker who seizes control of such a system could wreak havoc.

Echoing remarks he has made before, Alexander said the U.S. lacks sufficient defenses against cyber-attacks. On a scale of 1 to 10, he said, American preparedness for a large-scale cyber-attack is “around a 3.”

He said he was particularly worried about attacks that could shut down parts of the electrical grid or compromise public water systems.

“Destructive cyber-attacks against critical infrastructure are coming,” Alexander said.

Alexander said the military had yet to work out rules of engagement for responding to cyber-attacks, and he pointed out that neither of his agencies have the authority to defend against a cyber-attack on a private company, even if that company owns crucial infrastructure.  The pending bill would fix that, he said.

Some business groups oppose the bill as intrusive, and some civil liberties groups say it compromises privacy.

Alexander pointedly refused to comment on Stuxnet, a cyber-attack on Iran’s nuclear enrichment facilities that has been reported to have been the work of the U.S. and Israeli intelligence.  He also pushed back against the notion that the uptick in attacks on the U.S. is related to Stuxnet, which was first discovered in June 2010.

Alexander repeated his view that computer-based espionage against the industrialized world amounted to “the biggest transfer of wealth in history” because “adversaries have gone into our companies and taken intellectual property.”

He cited one estimate by the security firm McAfee that the losses from such spying add up to a trillion dollars. But, he said, "we don’t know. And which is more alarming:  that it’s really large, or we don’t even know how large it is? … What other countries are doing are stealing the next generation of [our] capabilities.”

Alexander didn’t name the countries, but China and Russia have  been cited by government officials as the biggest culprits, a charge they deny.

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Photo: NBC correspondent Pete Williams, left, interviews Gen. Keith Alexander  on  on cyber-security. Credit: Aspen Daily News 

Mexico signs anti-piracy treaty, setting up battle with activists

MEXICO CITY -- Mexico this week quietly signed the Anti-Counterfeiting Trade Agreement, or ACTA, a controversial multinational treaty that sponsors say protects intellectual property but opponents call an assault on privacy and freedom of expression.

Ambassador Claude Heller of Mexico signed the agreement Wednesday on behalf of the Mexican government in Japan.  The signing immediately set off condemnation among Internet activists in Mexico, who called the government's move a strategic ruse in an election year.

Mexico's Senate must ratify the treaty, but the chamber rejected ACTA in 2010 (link in Spanish).

By signing it while Congress is not in session -- and just days after the presidential election -- the administration of President Felipe Calderon is in effect forcing the issue to the front of the agenda once the new Congress convenes in September and before Calderon's term expires. The president-elect, Enrique Peña Nieto, assumes office for a six-year term in December. Peña Nieto has so far not indicated a position on the treaty.

ACTA has been negotiated and debated by world governments since it first emerged in 2008. The agreement would help improve international efforts to prosecute content and intellectual-property piracy, including digital and Internet platforms, but also covering trademarks, brands and pirated pharmaceuticals.

Opponents say governments could abuse ACTA and target private users  with criminal charges for downloading copyrighted material, for example, or force Internet service providers to monitor the  online activity of users and turn data over to authorities (link in Spanish).

The United States is a key signatory as of October 2011 with Australia, Canada, Korea, Morocco, New Zealand, Singapore and Japan. Last week, the European Parliament rejected ACTA in a crucial vote, a setback for the treaty. ACTA is "too vague, open to misinterpretation, and could therefore jeopardize citizens' liberties," the parliament said in a statement.

Mexico's signing, although contingent on ratification by the new Senate, revives momentum for ACTA supporters.

Rodrigo Roque Diaz, director of the Mexican Institute of Industrial Property, or IMPI, said in an interview that the government would ask Congress to develop legislation in the fall that would "jointly" protect Internet users concerned about privacy.

"The idea is not to criminalize the independent, private user of the Internet;  the idea is to sanction those who are violating author rights on a commercial scale," Roque Diaz told The Times.

Piracy in Mexico, which is commonly associated with outdoor markets where illegally produced DVDs and CDs are sold, "generates great economic and tax losses" estimated at 2.7 million pesos (about $200,000) an hour, he said. 

Activists in Mexico promised this week to vigorously oppose ratification of ACTA once the Senate convenes. They've started a Twitter campaign to request that each senator-elect stake out a position now  (link in Spanish). 

So far, leftist legislators are assumed to oppose ACTA, while the ruling conservative party members are assumed to support it. Peña Nieto's Institutional Revolutionary Party will hold the most seats in the new Senate, but the party's position on ACTA is yet unclear.

Antonio Martinez, a free-speech advocate and one of the forefront voices against the treaty  during the Senate's working-group debates on the issue in 2009 and 2010, said the government's signing of ACTA is "trickery."

"It's a very bad signal from the government to the outgoing Senate and to civil society;  it's disdainful of all the work done in the legislature," Martinez said Friday. ACTA "is dangerous for what it doesn't say. The IMPI is wrong, and it's almost as though they haven't even read the treaty," he said.

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Photo: A vendor shows pirated DVDs on a sidewalk in central Mexico City in 2006. Credit: Sarah Meghan Lee / For The Times

Barclays CEO Bob Diamond quits over rate-fixing scandal

This post has been updated. See the note below.

LONDON -- Bob Diamond, chief executive of Barclays, resigned Tuesday over an inter-bank rate-fixing scandal under investigation by U.S. and British financial authorities.  The announcement came a day after Barclays' chairman, Marcus Agius, quit his post for the same reason.

[Updated July 3, 7:29 a.m.: Jerry del Missier, the bank's chief operating officer, followed Diamond out the door later Tuesday, announcing that he had quit the post to which he had only recently been appointed.]

Barclays, one of Britain's leading investment and retail banks, is under fire from politicians and financiers and could face criminal investigation from Britain's Serious Fraud Office after reports last week revealed that it, along with about 20 major British and North American banks, had manipulated the LIBOR, the inter-bank borrowing rate used as a benchmark for private and corporate loans.   

Investigators revealed a culture of artificially fixed rates arranged in deals between traders and banks between 2005 and 2009, covering the years of the worldwide financial crisis.

The American-born Diamond headed Barclays Capital, the investment branch of the bank during those crucial years, before being appointed CEO in 2011.  Nevertheless, he has resisted offering his resignation until now. In a letter to Barclays staff Monday, he said he was committed to a "root and branch" review of the bank's practices and pledged that the board would "establish a zero tolerance policy for any actions that harm the reputation of the bank."

Barclays has been fined over $450 million by the U.S. Commodity Futures Trading Commission, the U.S. Justice Department and the British Financial Services Authority.

Diamond's resignation is effective immediately, but Agius will remain as chairman to oversee the installation of his and Diamond's successors.

In his resignation statement, Diamond said his decision came as "the external pressure has reached a level that risks damaging the franchise -- I cannot let that happen."

He went on to say that he was "deeply disappointed that the impression created by the events of last week about what Barclays and its people stand for could not be further from the truth.”

Diamond is scheduled to face a parliamentary committee panel of inquiry Wednesday, and said he looked forward "to fulfilling my obligation to contribute to the Treasury Committee's inquiries related to the settlements that Barclays announced last week, without my leadership in question.”

His announcement comes a day after British Prime Minister David Cameron called for a parliamentary cross-party inquiry to report by the end of the year, with an eye toward reviewing banking laws and regulations. Cameron's proposal is staunchly opposed by the opposition Labor Party, which is demanding a wider public, judge-led independent inquiry of the type now investigating media practices and ethics over the News Corp. phone-hacking scandal.

British Chancellor George Osborne welcomed Diamond's decision, telling the BBC  that it was "the right decision for Barclays and the right decision for the country. ... I hope this is the first step toward a new culture of responsibility in British banking."

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Photo: Bob Diamond. Credit: Carl Court / Getty Images

Barclays Bank chairman resigns over rate-fixing scandal

LONDON -- Marcus Agius, chairman of Barclays, one of Britain's biggest retail and investment banks, resigned Monday after a week of turmoil in which Barclays and other leading banks were revealed to be involved in deceptively fixing the interest rate for interbank lending.

Lloyds and the Royal Bank of Scotland were also among about 20 major Western banks that have come under investigation by U.S. and British authorities for manipulating the London interbank offered rate, or LIBOR, which forms the benchmark for interest rates on corporate and consumer loans.

A Barclays communique acknowledged that it has been fined $450 million by the U.S. Commodity Futures Trading Commission, the Justice Department's fraud section and Britain's Financial Services Authority.

In his resignation statement, Agius said that "as chairman I am the ultimate guardian of the bank's reputation. ... The buck stops with me and I must acknowledge responsibility by standing aside."

He said the past week's events, "evidencing as they do unacceptable standards of behavior within the bank, have dealt a devastating blow to Barclays' reputation."

Agius is the first major casualty in the rate-fixing, which was shown to be often influenced by cozy deals with individual traders over LIBOR rates. The scandal has prompted demands from some British financiers and lawmakers for a full inquiry, similar to the probe into media practices after a phone-hacking scandal that has convulsed the News Corp. conglomerate.  

Many political and financial observers also are calling for an overhaul of banking practices and ethics as well as further resignations, starting with that of Bob Diamond, Barclays chief executive since February 2011. He is expected to face heavy grilling this week from a parliamentary panel seeking answers about his knowledge and involvement in the bank's suspicious practices.

In widely broadcast comments last week, Bank of England chief Mervyn King accused Barclays of "shoddy treatment of customers ... [and] deceitful manipulation."

British Prime Minister David Cameron said Barclays management had "serious questions to answer," and that national regulators should use "all powers and means at their disposal to pursue this."

In his statement, Agius announced that Barclays' board will "undertake a root-and-branch review of all ... past practices that have been revealed as flawed,” and he promised a full report of the findings.

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Photo: Marcus Agius, chairman of Barclays, at a 2009 conference on climate change in Cape Town, South Africa. Credit: Pieter Bauermeister / EPA

WikiLeaks founder Julian Assange defies British police

LONDON -- WikiLeaks founder Julian Assange has defied a British police request to report to a London police station to begin extradition proceedings to Sweden, where he is wanted for questioning on sexual assault allegations.

Assange, who has won wide public support for revealing diplomatic and international business secrets on the WikiLeaks website, took refuge in the Ecuadorean Embassy this month, seeking political asylum.

Susan Benn, a member of the Julian Assange Defense Fund, read a statement outside the embassy Friday saying that Assange "has been advised that he should decline to comply with the police request."

It was no sign of disrespect, she insisted, but "under both international and domestic U.K. law, asylum assessments take priority over extradition claims."

"The issues faced by Mr. Assange are serious," she went on.  At stake was "the life and liberty" of Assange and those associated with WikiLeaks.

Before his move to the embassy, Assange, who denies wrongdoing, had been living under house arrest in Britain since December 2010, most of it spent in the country mansion of one of his supporters.

He has lost several appeals against his extradition; he reportedly fears that he could later be extradited to the United States, where he could face charges of espionage.

Europe ponders 'banking union' to avert further euro crises

European leaders called Wednesday for the 17-nation Eurozone to create a "banking union" to collectively stabilize struggling financial institutions and protect national governments from taking on excessive debt to bail out their banks.

The proposal of the European Commission was spurred by mounting fears that Spain, the fourth-largest economy among the nations that use the euro currency, can't afford to recapitalize banks staggering under the weight of bad loans issued during a building boom that went bust with the 2008 recession.

If the Spanish government is left to bail out the nation's banks, the government itself risks becoming insolvent. Its borrowing costs have risen to record highs on fears that Spain could be the next Eurozone member to need a bailout. Spain last week promised troubled lender Bankia nearly $24 billion to keep it afloat in a sea of defaults and foreclosures on properties now worth a fraction of the prices buyers paid.

On Wednesday, interest rates on Spanish 10-year bonds reached 6.67%, the highest since Spain became a charter member of the euro club in 2002 and a rate demonstrating lenders' concerns about the stability of Spain's finances. Government officials acknowledge that borrowing at that rate is unsustainable.

"Ambitious steps to accelerate and deepen financial integration may be needed," the European Commission, the regulatory body of the 27-nation European Union, said in a report urging central regulation of the entire Eurozone banking sector. "Already before the crisis, it was acknowledged that the EU model of cross-border banking was not stable."

Whether that deeper integration and collaboration to recapitalize national banks can be done without further voter approval remained unclear. EU Commissioner Olli Rehn pointed out that neither the temporary bailout fund in place for troubled euro-based economies nor the permanent rescue fund, known as the European Stability Mechanism, has the authority to spend its money on national bank bailouts.

In the volatile atmosphere of Eurozone nations suffering high unemployment rates and drastic budget cuts, getting popular or parliamentary endorsement of changes to the institutions' powers would be time-consuming and risky, Rehn and other economic analysts have warned.

To get around the limitations, the 17 nations that use the currency have been making loans to their own struggling banks, and in the cases of Ireland and now Spain have pushed their governments to the brink of insolvency.

Differences also persist among the euro-using countries on the notion of a central banking authority. The most notably resistant is Germany, the Eurozone's leading economy and beneficiary of low interest rates, which would rise considerably if Berlin were to share the region's debt burdens.

"The German position on direct recapitalization of banks from the European rescue fund is known," said Steffen Seibert, Chancellor Angela Merkel's spokesman, when asked about the commission proposal for integration and bailout-sharing.

The commission report makes some specific recommendations for Eurozone states, including giving Spain more time, until 2014, to meet its mandated deficit reductions. Spain and France both need to further adjust retirement ages for public pensions and Ireland needs to lower its deficits and more seriously pursue tax evaders, the report says.

Irish voters go to the polls Thursday to have their say on a fiscal treaty that requires euro member countries to limit their deficits and debt. Polls suggest the Irish will approve the agreement, pushed by Merkel and ratified by five other euro users. Only countries that ratify the treaty will have access to bailout funds, and although the Irish have been chafing under austerity measures as much of the Eurozone has, its citizens may consider the rescue mechanism an important insurance policy.

The proposal for a centrally managed banking union is expected to be addressed at an EU summit in June, along with other ideas that have surfaced for easing the pain of austerity with more investment in growth in the midst of the debt crisis.

The euro nations have been pondering proposals to issue jointly backed "eurobonds" that could be used to loan money to teetering economies such as Greece and spread the interest rate burden among the entire Eurozone.

Most members of the zone, with the prominent exception of Germany, have also been calling for more spending to foster growth, create jobs, improve infrastructure and boost production and tax revenues that could be used to pay down debt later.

EU leaders met in Brussels last week for an informal brainstorming session but reportedly found little unity on how to proceed. Merkel remains adamant that heavily indebted countries pare their deficits now rather than spend more, which would add to the pressures that have sent the euro to its lowest level against the dollar in two years. The leaders agreed on little other than to revisit the spending and saving initiatives at their June summit.

The flurry of activity over how to protect the euro has been running at fever pitch since Greek and French voters early this month threw out leaders committed to austerity measures.

Greece was left without a functioning government after its fractured vote, and coalition-building talks failed among the ideologically irreconcilable parties. A repeat vote is scheduled for June 17, and Greeks in favor of remaining in the Eurozone -- a solid majority, according to polls -- say they hope to see more support this time for mainstream parties.

Concerns that Greece might elect anti-austerity figures has thrown the Eurozone into panicky speculation about whether Athens might default on its debt-reduction promises and drop out of the currency union.

The euro crisis has stoked fears for the future of the entire European integration project, a recent survey by the Pew Research Center found. The center's study of public opinion in eight EU countries, including five that use the euro, exposed a "crisis of confidence evident in the economy, in the future, in the benefits of European economic integration, in EU membership, in the euro and in the free market system,” Pew said in a statement accompanying its survey earlier this week.

Analysts say Greece would be far worse off without the euro than if it stayed in the currency union.

"I don't think the Greeks really understand how miserable their lives would be if they really got out of the Eurozone. Look what happened in Argentina when they walked away from the dollar," said Keith Crane, senior economist with the Rand Corp., comparing the predicted tumble in living standards ahead for Greece to the widespread economic misery that confronted Argentines a decade ago.

The National Bank of Greece issued results of a study Tuesday that showed Greeks would lose half their annual income and see dramatic rises in unemployment and inflation if they were to abandon the euro and reissue the drachma.

World Bank President Robert Zoellick, in an interview with The Times last week, said the real danger for the global economy if Greece leaves the Eurozone is the risk of "contagion," of investors making a run on other struggling euro nations'  banks out of fear that their money isn't secure.

"You're starting to see in the markets that if Greece leaves, investors are saying, 'This could happen to Spain,' and all of a sudden you've got a currency risk that you didn't have when they were all part of the euro," Zoellick said. "If a lack of confidence leads to panic and people just start to withdraw money, the country has to guarantee banks' liabilities. If the [government] does that in the United States, people assume the [government] will be good on its word. In Europe, they're not so sure. It's not clear whether the Germans are willing to do that, at least not today."

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Photo: German Chancellor Angela Merkel, center, and European Commission President Jose Manuel Barroso, to her right, toast the ideals of European unity in a pub in Stralsund, Germany, on Wednesday. Credit: Guido Bergmann / Pool Photo