BRUSSELS, Belgium - European leaders were wrestling Thursday over how much of their sovereignty they were willing to give up in a desperate attempt to save the ambitious project of continental unity that grew from the ashes of World War II.
At stake at the summit in Brussels is not only the future of the euro, but also the stability of the global financial system and the balance of power in Europe.
To convince financial markets that Europe's economy-crushing debt crisis is a one-time event, countries will have to give up significant powers, such as some decisions on borrowing and spending, to a central authority.
President Nicolas Sarkozy of France and Chancellor Angela Merkel of Germany want to persuade the 15 other eurozone leaders to agree to a plan that would require their governments to balance their budgets and accept automatic sanctions if they don't.
At the same time, the currency bloc's largest economies are being pushed to commit more money to boost the eurozone's firewalls as the crisis threatens to pull down Italy and Spain.
The overall plan must be good enough to persuade the European Central Bank to intervene in the government bond markets in a manner large enough to stop the panic there, said Paul De Grauwe, an economics professor and EU expert at the Catholic University of Leuven, in Belgium.
The president of the ECB said the bank currently had no plan to increase the scale of its bond interventions, which could keep down the borrowing costs of weak countries such as Italy and Spain, as markets had been hoping. Stocks and the euro fell, while the borrowing rates for Italy and Spain skyrocketed.
ECB chief Mario Draghi had hinted last week that if governments agreed to tighter budget controls, the central bank might step up support. Analysts said his comments Thursday served to keep pressure on politicians to reach a deal.
Merkel and Sarkozy want to enshrine the tougher budget oversight in a treaty, either by changing the existing EU treaty or creating a new one for the 17 eurozone nations that others could opt in to.
An EU official said that in the first hours of the summit, leaders agreed that national debt brakes should limit deficits before debt and interest payments to 0.5 percent of annual economic output. The official was speaking on condition of anonymity because the talks were ongoing.
The 0.5 percent limit, which could only be exceeded in exceptional situations or to counteract a recession, is stricter than the 3 percent cap set out in current EU law, although the 3 percent also includes interest and debt payments.
"Words alone are not believed anymore because too often we did not live up to our words," Merkel told a rally of fellow European conservatives in Marseille, France, ahead of the summit.