EUROPE’S CHAOTIC attempt to assert control over the debt crisis slid further into disarray last night as Germany and France called a second EU summit next week in an effort to settle a worsening dispute over the debacle.
The abrupt move, which stunned officials in Brussels, reflects anxiety that it will be impossible to reach a deal to stamp out the turmoil when EU leaders gather on Sunday for a postponed summit.
This summit will still go ahead but an anticipated “grand bargain” deal is off.
German chancellor Angela Merkel and French president Nicolas Sarkozy have scheduled a special meeting in Brussels on Saturday night, their third in less than a fortnight.
Despite their repeated claims of unity, the two leaders have been at odds for weeks over the expansion of Europe’s bailout fund and a second rescue plan for Greece.
A further challenge emerged yesterday when Dr Merkel’s government encountered resistance to the fund’s overhaul from a parliamentary committee whose assent is required for Berlin to move ahead with the changes.
The demand for a second summit, most likely next Wednesday, follows contentious emergency talks two nights ago in Frankfurt in which Dr Merkel and Mr Sarkozy failed to reach common ground.
“Their meeting did not go well. They’re still some way off,” said a source who was briefed on the meeting by top European and International Monetary Fund officials.
Mr Sarkozy received a phone call during the meeting to be told his wife, Carla Bruni-Sarkozy, had given birth to a girl, the couple’s first child.
Diplomats believe the plan to call a second summit is deeply damaging to the credibility of Europe’s effort to tackle the crisis.
Furthermore, they say the initiative runs the danger of aggravating tension on already volatile markets.
Amid confusion yesterday over the outlook for the talks this weekend, the euro fell against the US dollar and European shares hit a two-week low.
In the hours before Dr Merkel and Mr Sarkozy called the second summit, a senior official figure in Brussels indicated that the expectations for the summit on Sunday were too high to risk contemplating another.
Asked if a second summit was in prospect, the EU official said: “Is there life after death?” The gathering next Sunday, already delayed by six days, had been billed as the culmination of a concerted attempt to seize the initiative definitively from restive markets.
After nearly two years of turmoil, Europe has been under growing pressure from global leaders to assert control over the emergency.
Amid gloom in Brussels over repeated warnings from Berlin that no “magic bullet” solution to the crisis was to hand, European officials moved yesterday to playing down expectations from the meetings this weekend.
“I expect – that’s my personal guess – that after the meetings on Sunday there will be still be a lot of technical, further precision work to be done in the days after the meeting of Sunday,” one senior figure said.
In a joint statement last night, France and Germany said EU leaders will examine new plans to tackle the crisis taking a final decision at a second meeting “no later than Wednesday.”
The greatest schism between the two leaders centres on the bailout fund, with Dr Merkel resisting pressure to expand the fund’s firepower to some €2 trillion so it can insure bond issues by euro weak zone countries. She also opposes Mr Sarkozy’s drive to use the European Central Bank to leverage the fund’s assets, something the ECB itself has rejected.
“If there is one aspect without which all the others will lack credibility this is indeed the need to reinforce the euro zone’s firewalls,” European Commission president José Manuel Barroso said yesterday.
