October 26, 2011
European Union talks with banks on bondholder losses as part of a second Greek bailout ran aground, an EU official said, dimming the chances for a comprehensive crisis-fighting strategy at tonight’s summit.
German Chancellor Angela Merkel and French President Nicolas Sarkozy, leaders of Europe’s two biggest economies, may step out of the leaders-only summit to meet bankers in an effort to break the deadlock, a person familiar with the discussions said.
“Work’s not been done yet, but everyone’s coming here today with the goal to progress quite a bit,” Merkel told reporters as she arrived for the Brussels summit.
The Greek stalemate darkens the summit’s prospects, since a deal struck today on recapitalizing banks and later talks on bolstering the 440 billion-euro ($608 billion) rescue fund hinge on steering debt-laden Greece toward financial health.
While policy makers and bondholders were converging on a 50 percent writedown of Greek debt, clashes over collateral to underpin the transaction will limit the summit to issuing a mandate for further talks, the EU official said in Brussels today on condition of anonymity.
European leaders convened for the second summit in four days -- and the 14th in 21 months -- amid mounting global exasperation over their failure to extinguish the two-year-old crisis that now threatens to ravage Italy and France and brake the world economy.
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