Germany and France have convened another European Union summit next week to finalise a package of comprehensive measures to tackle the euro zone debt crisis as their continuing dispute over the size of the group’s bailout fund threatened to block an agreement at a summit on Sunday.
German Chancellor Angela Merkel and French President Nicolas Sarkozy could not resolve their differences over further boosting the European Financial Stability Facility (EFSF), recapitalisation of European banks heavily exposed to sovereign debts and a partial write-down of Greek government’s debts at a two-hour emergency meeting in Frankfurt on Wednesday night.
They will continue their discussions in Brussels tomorrow ahead of Sunday’s meeting of the EU heads of State and government and they intended to use the summit to work out the details of a comprehensive package of measures, which could be finalised on Wednesday, a government spokesman said in Berlin.
The two leaders promised a “comprehensive and ambitious” response to the debt crisis after a telephone conversation yesterday, the spokesman told journalists.
Yesterday’s surprise announcement by the euro zone’s two largest economies to delay a final decision on a new debt crisis strategy till Wednesday will give Chancellor Merkel enough time to win German Parliament’s endorsement for any changes to the euro zone bailout fund, which was expanded to 440 billion euros from 250 billion euros and given new powers by the EU leaders two months ago.
The EFSF became fully operational only last week after Slovakia ratified it as the last among the 17 nations using the single currency.
Merkel cancelled a policy statement before the Bundestag, the lower house of Parliament, scheduled for today on Sunday’s summit because of continuing disagreement with France and disapproval of the European Commission’s draft proposals on strengthening the fund by the budgetary affairs committee of the house.
She will be travelling to Brussels without any parliamentary authorisation to finalise any deals with her EU partners to overcome the 18-month debt crisis.
Sunday’s summit was originally scheduled for October 16 and 17, but it was postponed following disagreement between Germany and France.
Germany has been under pressure from France and some other European partners to further increase the size of the EFSF from 440 billion euros agreed on July 21 or at least to endorse a credit leverage mechanism, which will allow it to give credit guarantees of up to 2 trillion euros.