|German Chancellor Angela Merkel, left, wants tighter EU fiscal control, despite British opposition [EPA]
European Union (EU) leaders are gathering in Brussels for summit talks dubbed by some analysts as a "do or die" moment for the continent's euro, with Germany and France set to push for extensive fiscal reforms to save the debt-stricken single currency from collapse.
With the entire 27-state EU placed under downgrade watch by international credit rating giant Standard & Poor's, leaders are trying to navigate obstacles to treaty changes required to enforce tougher rules on budgetary discipline.
Speaking on Thursday in the sidelines of a political conference in Marseilles, French President Nicolas Sarkozy said, "We need to re-think Europe, and we need structural changes, and our wish is that this change is with the 27, and no one is left behind".
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"Our greatest wish is that no one is opposed to the necessary reforms of the eurozone," he said.
Germany's Chancellor Angela Merkel emphasised the same points, saying, "We need more Europe, this is why today and tomorrow we will be having many discussion and debates.
"There will be changes here and there, but I'm sure at the end of the day we will have a result."
Earlier in the day, the Chinese rating agency Dagong cut its credit rating for France amid fears that the debt crisis in the eurozone could have negative consequences for the entire global economy.
France is the second European country in as many days to see its credit rating cut by Dagong after Italy's rating was downgraded from "A-" to "BBB" with a negative outlook due to the country's growing reliance on the European Central Bank (ECB) to buy its bonds and its declining ability to repay debt.
Germany and France, the eurozone's biggest economies, are pushing for a new EU treaty, saying stricter fiscal rules should be in place, but European Council President Herman Van Rompuy, the EU's senior official, is offering a plan which only requires amending existing treaties.
"We are convinced that we need to act without delay," Merkel and Sarkozy wrote in a joint letter to Van Rompuy, adding that the new treaty was needed by March.
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The Merkel-Sarkozy letter also called for "a renewed contract between the euro area member states".
If all 27 EU members cannot agree, Berlin and Paris are believed to be prepared to work towards a new treaty involving the 17-nation eurozone bloc and any other country that wants to join.
Al Jazeera's Tim Friend, reporting from Brussels, said the renewed contract poses huge questions about national sovereignty. "Those rules are being revised already," he said.
"It is a move towards a more centralised control," he said, "and it creates problems at home. Britain is not the only one with an issue; Ireland and possibly the Netherlands will have a problem too."
The head of the eurozone finance ministers said on Thursday that Sarkozy and Merkel hoped to get all 27 European Union countries on board with the proposed treaty changes.
"A treaty of all 27 members is to be hoped for, but if there are countries that don't want to accompany us in our search for a better European architecture then we'll go with a treaty of 17,'' Jean-Claude Juncker, the Luxembourg finance minister, said in an interview on French radio.
The 10 non-eurozone members of the 27-member EU, including Britain, are concerned the EU may become a two-tier club, as they may become isolated if the eurozone nations - driven by Berlin and Paris - decide to move to a new treaty on their own.
The biggest obstacles to any agreement, according to high-ranking officials and diplomats, are Germany's refusal to embark on anything short of treaty change agreed under the full glare of lengthy, costly and risky public consultation, but that its government considers legally secure.
Also threatening hopes for an EU-wide deal is the UK's refusal to back changes unless it secures important safeguards such as ring-fencing London's financial sector from future EU regulation including a proposed tax.
European Commission chief Jose Manuel Barroso urged the EU to "do everything" to save the euro ahead of the Brussels summit.
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"The entire world is watching. We must do everything," to save the euro, he said, adding: "It is extremely important that we all together, all the EU, show that the euro is irreversible."
In a further indication of the international scale of the crisis, US President Barack Obama held urgent telephone talks late on Wednesday with Merkel.
Obama also sent his treasury secretary, Timothy Geithner, to Europe for talks with key players that are continuing on Thursday in Marseilles, France, where EU conservative allies are meeting for pre-summit strategy talks.
The ECB stepped up its efforts against Europe's debt crisis by cutting interest rates on Thursday for the second time in five weeks, and by extending longer-term loans to ease financial pressure on struggling banks.
Source: Al Jazeera and agencies