October 20, 2011
With his wife Carla Bruni giving birth in Paris, French President Nicolas Sarkozy was at an emergency euro meeting in Frankfurt in an effort to find agreement with Germany. But the meeting ended with no apparent progress made, raising questions about whether a solution to the currency crisis will be found before the EU summit on Sunday.
Wednesday's emergency meeting in Frankfurt, attended by French President Nicolas Sarkozy, Chancellor Angela Merkel and important European Union leaders, was hastily convened. And its last-minute nature underscores how dramatic the situation has become in the run-up to the EU summit in Brussels on Sunday. Sarkozy even missed the birth of his daughter, as wife Carla Bruni gave birth to Dalia Sarkozy on Wednesday evening.
With only a few days to go before the EU summit, Europe's two most important countries still remain divided on a key issue. It is a division that threatens to jeopardize efforts to agree to a comprehensive rescue package on Sunday.
France is pushing for the euro backstop fund, the European Financial Stability Facility (EFSF), to be provided with a a banking license that would enable it to use its assets as collateral to borrow even more money from the European Central Bank (ECB). Both Germany and the ECB oppose the step, but France is insisting.
"You know the French position and we are sticking to it," French Finance Minister Francois Baroin said in Frankfurt before the meeting. "We think that clearly the best solution is that the fund has a banking license with the central bank, but everyone knows about the reticence of the central bank. Everyone also knows about the Germans' reticence. But for us that remains ... the most effective solution." Both Baroin and his German counterpart Wolfgang Schäuble also participated in the meeting.
Senior officials in the German government say the country is opposed to the French solution. Berlin instead favors an approach that would turn the backstop into a kind of insurance fund providing guarantees to public and private investors by covering the first 20 to 30 percent losses on their investments in state bonds. Such a move could allow the fund to martial aid worth up to €1 trillion. The German government also enjoys the ECB's support.
Following Thursday's meeting, it appears Germany and France could be facing an impasse in the euro crisis. After two hours, the talks ended without Merkel or Sarkozy providing any statement.
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