French-German disputes could mar European summit
BRUSSELS — European Union leaders sought Thursday to overcome sharp differences over how to improve supervision of their banks and budgets, at the start of a two-day summit meeting aimed at resolving the eurozone crisis.
But with market pressure on their single currency easing, at least for now, there were already signs that leaders could return to a familiar pattern of bickering, which could delay agreed-to changes, like creating a single regulator for all eurozone banks.
One of the issues overhanging the meeting is a dispute between France and Germany on whether to create such a supervisor by January, as the European Commission has proposed. Paris is pushing to meet that deadline.
French leaders have also pressed for speedy adoption of European legislation to tighten budget discipline across the eurozone, as well as measures to pool at least some of the eurozone countries’ debt.
Germany, by contrast, has emphasized a more cautious approach and is seeking even greater powers of intervention to enable the most solvent countries to enforce budgetary discipline in the eurozone.
The French-German dispute matters. Agreement between governments in Paris and Berlin is seen as vital to any steps toward further integration in Europe and for ensuring the survival of the common currency for the 17 EU countries that use it.
Ahead of the Brussels meeting, Chancellor Angela Merkel of Germany signaled the need for caution and a much grander vision for how to secure the longevity of the euro.
“We are of the opinion — and I speak for the whole German government on this — that we could go a step further by giving Europe real rights of intervention in national budgets,” Merkel told lawmakers in Berlin on Thursday.
That earned a tart riposte from President François Hollande of France, who said that budget intervention “is not on the agenda,” as he arrived at the meeting.
“The only decision that will be taken is to set up a banking union by the end of the year and especially the banking supervision,” Hollande said.
The creation of a single banking regulator for the euro area was supposed to be a relatively straightforward matter after leaders agreed at a summit meeting in late June to put all lenders in the region under the aegis of the European Central Bank.
The idea was eagerly supported by Ireland, Italy and Spain, because it would be a precursor to letting weak banks in those countries tap Europe’s new bailout fund directly, without loading more debt on those countries’ governments.
Since June, though, Germany has balked at proposals by the European Commission and France to put all 6,000 lenders in eurozone countries under the supervision of the regulator in a system that would be phased in starting Jan. 1.