Sunday

11th Jun 2023

EU summit delayed as France, Germany tussle

  • Van Rompuy says more time is needed to discuss eurozone issues ahead of a summit (Photo: consilium.europa.eu)

European Council President Herman van Rompuy has delayed by a week a planned summit of the bloc’s leaders in order to give more time for behind-the-scenes negotiations on plans to bring an end to the eurozone crisis.

Van Rompuy first tweeted the news of the delay mid-afternoon on Monday (10 October), and later said that he had “decided to convene” the EU Council and subsequent eurozone summit on 23 October, a Sunday instead of the originally planned two-day event from 17-18 October.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

“This timing will allow to finalise our comprehensive strategy on the Euro area sovereign debt crisis covering a number of interrelated issues,” he said.

The announcement comes in the wake of an inconclusive meeting between the EU’s two economic powerhouses, France and Germany, on Sunday.

Leaders Angela Merkel and Nicolas Sarkozy ended a discussion in Berlin with little fresh to announce other than a commitment to have a plan in place by the end of the month.

Berlin and Paris are divided over whether a second round of bail-outs of European banks should be performed by national governments or the eurozone’s rescue fund, the European Financial Stability Facility.

France wants the EFSF to perform the task, in effect sharing the burden of bank recapitalisation across the euro area in order to stave off a downgrade in the country’s triple-A credit rating.

French banks are heavily exposed to sovereign debt in the EU periphery and the state will have to stump up significant sums to bail its financial institutions out, a move that will hike its public debt levels. This in turn will likely draw the ire of credit rating agencies.

Germany for its part is less exposed and would prefer the EFSF to be used only if states themselves are incapable of funding the bank bail-outs.

The International Monetary Fund has estimated that it will cost the EU as a whole some €200 billion to recapitalise its troubled banking sector.

Sarkozy and Merkel are also divided over whether to accept a sovereign default by Greece. The German finance ministry is understood to be planning for this possibility while France is opposed, again as a result of the level of its exposure to peripheral debt. Berlin for its part feels that a Greek default is inevitable and that a controlled default is preferable to the chaos that could ensue in the alternative scenario.

Van Rompuy said nevertheless that negotiations on a range of items are progressing well.

“Significant progress has been accomplished in the implementation of the July package. The 6-pack [of legislation delivering greater economic centralisation in Europe] has been approved. The European Financial Stability Facility (EFSF) ratification process is nearing completion. Consultations on the Eurozone governance have progressed well,” he said in a statement.

However, he did concede that there were topics that remained unresolved.

“Further elements are needed to address the situation in Greece, the bank recapitalisation and the enhanced efficiency of stabilisation tools - EFSF,” he said.

Carsten Brzeski, a senior economist with ING Bank in Belgium, told EUobserver that the delay is probably both good and bad news.

“It is probably both. A bad sign as it shows that, despite Sunday’s feel-good press conference, Germany and France are still not on the same page,” he said. “As so often, the devil is in the detail, particularly when it comes to the issue of bank recapitalisations and Greek debt restructuring.”

“However, to give it at least some positive touch, postponing it to a Sunday shows at least the commitment to come up with a credible solution,” he said.

French banks hit amid worries over Greek exposure

Major French banking stocks were pummelled on Monday on the back of persistent worries that Greece is on the verge of defaulting on its loans. As shares tumbled, EU leaders have scrambled to get ahead of the curve.

Merkel, Sarkozy will do ‘whatever necessary’ to bail-out banks

Financial markets hoping for the outline of some grand strategy for dealing with the ever-worsening eurozone crisis are likely to be disappointed by the vague announcement offered up by the French president and German chancellor after emergency talks in Berlin on Sunday.

Agenda

This WEEK in the European Union

EU leaders on Sunday will again scramble for a solution to the eurozone crisis. During the week, agricultural policy is up for debate at a ministers' meeting and the first two Galileo satellites will take off from French Guyana.

Opinion

The 'BlackRock exemption' has no place in the EU's due diligence directive

With the EU's Corporate Sustainability Due Diligence Directive, there's an opportunity to harness the power of investment for truly sustainable activities. But to do this, it must not allow the 'BlackRock exemption' and instead cover institutional investors and asset managers.

Final push for EU-Mercosur deal, amid deforestation fears

Finalising the EU-Mercosur agreement is a priority for the EU and the upcoming Spanish EU council presidency, ahead of the summit with Latin America and the Caribbean countries to be held in Brussels on 17 and 18 July.

Latest News

  1. Negotiations on asylum reform to start next week, says MEP
  2. EU gig workers compromise dubbed ‘a disaster for workers’
  3. EU's one-off chance to influence Laos taking over ASEAN chair
  4. Belgian bâtonnier on Russia: 'You can have a client you don't like'
  5. EU's proposed ethics body 'toothless', say campaigners
  6. Study: 90% of Spanish inflation 'driven by corporate profits'
  7. If Spanish economy is doing well, why is Sanchez poised to lose?
  8. EU lawyers for Russia: making 'good' money?

Stakeholders' Highlights

  1. Nordic Council of Ministers20 June: Launch of the new Nordic Nutrition Recommendations
  2. International Sustainable Finance CentreJoin CEE Sustainable Finance Summit, 15 – 19 May 2023, high-level event for finance & business
  3. ICLEISeven actionable measures to make food procurement in Europe more sustainable
  4. World BankWorld Bank Report Highlights Role of Human Development for a Successful Green Transition in Europe
  5. Nordic Council of MinistersNordic summit to step up the fight against food loss and waste
  6. Nordic Council of MinistersThink-tank: Strengthen co-operation around tech giants’ influence in the Nordics

Stakeholders' Highlights

  1. EFBWWEFBWW calls for the EC to stop exploitation in subcontracting chains
  2. InformaConnecting Expert Industry-Leaders, Top Suppliers, and Inquiring Buyers all in one space - visit Battery Show Europe.
  3. EFBWWEFBWW and FIEC do not agree to any exemptions to mandatory prior notifications in construction
  4. Nordic Council of MinistersNordic and Baltic ways to prevent gender-based violence
  5. Nordic Council of MinistersCSW67: Economic gender equality now! Nordic ways to close the pension gap
  6. Nordic Council of MinistersCSW67: Pushing back the push-back - Nordic solutions to online gender-based violence

Join EUobserver

Support quality EU news

Join us