A SUDDEN move by Germany and France to delay a new rescue plan for the euro zone stirred doubt over the strength of the package and prompted withering criticism from their EU partners.
As Luxembourg’s prime minister Jean-Claude Juncker said the failure to settle the debt crisis was “disastrous” for Europe’s image, senior officials and diplomats played down the likelihood of a major breakthrough this weekend.
The unexpected demand from Berlin and Paris for a second summit next Wednesday threw preparations for a key summit tomorrow into confusion. The day-long gathering had been billed as a decisive moment in the effort by EU leaders to finally come to grips with the emergency.
Amid biting complaints in Brussels about the Franco-German manoeuvre, high-level officials said the move risked further undermining confidence in effort to control the crisis. However, European stocks rallied yesterday in anticipation of a new deal.
A spokesman for German chancellor Angela Merkel said the Wednesday summit will “take decisions”, adding that Berlin needs time to study plans to expand Europe’s bailout fund. This reflects disquiet in Berlin at the late delivery of a series of technical reports.
Berlin has also said the second summit was necessary in view of a new court-imposed requirement for a committee of MPs to approve any expansion of Europe’s bailout fund.
European officials were sceptical, however. They said the more likely cause was the schism between Dr Merkel and French president Nicolas Sarkozy over new powers for the fund and losses for Greek investors in its second rescue.
Although the chancellor is resisting pressure from Mr Sarkozy to deploy European Central Bank loans to boost the bailout fund, French finance minister Francois Baroin said last night that this was “not a definitive point of discussions” for Paris. “What matters is what works.” He was speaking after a six-hour emergency meeting of euro zone finance ministers, who approved an €8 billion bailout loan for Greece.
No agreement was reached to settle the fundamental divisions over the new rescue package, but a source briefed on the talks said the ministers “seem to making some progress”. A further meeting of the ministers is likely next Tuesday or Wednesday.
Mr Juncker, leader of the euro ministers, said he would have preferred if the second summit was not called and that a deal was struck tomorrow. “We’re not really giving a great example of a high standing of state governance,” he said.
“There isn’t just a problem between Germany and France. Germany isn’t the only country with a parliament; others have them too.” Diplomatic sources involved in the summits said Germany and France remained far apart on many issues. Mr Sarkozy is still said to be pushing against German demands to limit the expansion of the bailout fund’s firepower to €1 trillion.
Many EU countries fear an increase of that scale might not convince markets.
Dr Merkel spoke on Thursday with US president Barack Obama, who has pressed for a quick settlement of the debt crisis. She meets Mr Sarkozy tonight in Brussels, their third meeting in a fortnight.
These talks come as centre-right EU leaders – including Taoiseach Enda Kenny – gather tonight in the city for pre-summit meeting of the European Peoples’ Party, Fine Gael’s affiliate in the European Parliament.
As he arrived in Brussels, Minister for Finance Michael Noonan said he was “not too surprised” that the second summit was called. “I think anyone who read the German supreme court judgment on the involvement of parliament . . . could have anticipated that a parliamentary process would have to be involved.”
