DSK gloomy on the euro as treaty talks start

The former International Monetary Fund chief, Dominique Strauss-Kahn described the euro as a "raft about to capsize" yesterday on the eve of renewed treaty talks in Brussels.

Mr Strauss-Kahn was making his first appearance on the international political scene since he had to resign as head of the IMF to fight allegations of attempted rape in New York. At a conference in Beijing, the former French finance minister said the plans agreed by 26 of 27 EU nations to rescue the euro had "failed to restore market confidence", and would fail to kick-start growth.

Mr Strauss-Kahn said: "The euro is in the middle of the river. As long as budgetary union is incomplete, it is very, very vulnerable. The raft appears to be about to capsize."

His comments came as 26 EU governments, with Britain as observer, meet today to put flesh on the bones of the "inter-governmental" treaty to strengthen budgetary discipline in Euroland agreed in outline in Brussels 11 days ago. A draft put forward by EU Council President Herman van Rompuy suggests a loose treaty, with ratification by only nine of the 17 eurozone countries needed for it to come into effect. Whether this will be robust enough to satisfy Germany and reassure global markets remains unclear.

Senior finance ministry officials and diplomats from the 26 countries that agreed to negotiate a treaty outside the existing EU framework will give first reactions to the draft in Brussels today.