The leaders of 25 European states today signed a new treaty designed to prevent the 17 euro countries from living beyond their means and prevent a repeat of the currency union's crippling debt crisis. The leaders hope the accord, known as the fiscal compact, will also lead the way toward closer political and economic integration in the eurozone. Only Britain and the Czech Republic decided not to sign the agreement, triggering some concern over a rift in the 27-country European Union.
The fact that not all EU states backed the new rules forced the others to set them up in a separate treaty, rather than integrating them into EU law. That prevents its signatories from taking advantage of some of the bloc's established institutions, such as the European Commission, the EU's executive that usually oversees the implementation of EU law. All participating governments must now ratify the treaty at home—a process that may prove difficult in some places. The treaty can come into force once at least 12 euro countries have ratified it. (Read more European Union stories.)