Germany tried to put an optimistic face on discussions with France over a strategy to deal with Europe’s crippling debt crisis on Octb 21, despite a warning from a French minister that the euro currency itself was under threat.
Markets appear to be giving Europe the benefit of the doubt that they will eventually be able to agree to a comprehensive package of measures in time for a second summit, a German government spokesman said was tentatively scheduled for Oct. 20. Europe’s main stock markets are all trading higher on Oct. 21, with the Stoxx 50 of top European shares up 1.6 percent.
Chancellor Angela Merkel refused to discuss any differences between Germany and France in talks with lawmakers a day after the two countries conceded that a new strategy won’t emerge this weekend. Members of her government repeatedly stressed Europe’s two biggest economies were in agreement on the broad outlines of a deal.
But French Agriculture minister Bruno Le Maire, who has been involved in the negotiations, indicated the spat was more critical than the Germans seemed willing to concede.
“It’s the first time Europe has faced a crisis this serious, because it is a crisis that puts in doubt European solidarity, it’s a crisis that risks exploding the main political achievement of recent years, the euro; and it’s also a crisis that has stripped us of our outlook and vision,” Le Maire told French BFM TV.
Finance ministers from the 17 countries that use the euro were scheduled to look for ways to thrash out differences of opinion on late Oct. 21 as they gather in Brussels, ahead of the arrival of the leaders one day after. Ahead of their meeting, the chairman of the eurogroup, Jean-Claude Juncker, said the delay to a debt crisis deal created a “disastrous” image of the eurozone to the outside world and that it’s not necessarily just France and Germany that have differences of opinion.
Sunday’s leaders’ summit had been earmarked as the time Europe would finally deliver a comprehensive plan to get a grip on the currency union’s debt troubles, which has seen three countries bailed out and threatened the future of the euro currency itself.
Leaders had been expected to detail new financing for debt-ridden Greece, produce plans to make Europe’s banks fit to sustain worsening market turbulence and further empower the eurozone bailout fund.
Though Merkel insisted in discussions with lawmakers on Oct. 21 that there are no major differences of opinion between herself and French President Nicolas Sarkozy, Europe’s two biggest economies appeared to be at loggerheads over how to make best use of the bailout fund, the so-called European Financial Stability Facility, or EFSF.
Merkel’s spokesman Steffen Seibert said Merkel and Sarkozy held a telephone conference on Oct. 20 with U.S. President Barack Obama and Prime Minister David Cameron to discuss the summit and that leaders agreed the outcome must involve sending “a clear signal of an end to the debt crisis.”
France proposes turning the EFSF into a bank that would have access to unlimited credit from the European Central Bank, Germany has refused to sanction such a move, arguing it would compromise the ECB’s impartiality.