Franco-German row blocks debt crisis agreement


Eurozone leaders conceded last night there are still huge divisions on how to solve the bloc's debt crisis with no chance of agreement by the end of Sunday's summit, which was originally slated as a make-or-break meeting.

The disarray continued last night when France and Germany announced they would schedule a second summit of EU leaders to take place "by next Wednesday" to put in place a deal on the expanded EU bailout fund.

The decision, made apparently without prior consultation with other EU leaders, caused surprise in Brussels. It was also unclear if Sunday's planned meeting would be shelved altogether.

Summits should normally be called only by the EU President, Herman van Rompuy, and are held at massive cost, with an army of security personnel and police drafted in.

"We were not informed," said one dumbstruck EU diplomat. Another said: "It's about time the French and Germans stopped talking just to each other and started informing the rest of the world."

The deepening Franco-German row over bailout funding grew on Wednesday after Nicolas Sarkozy made an unscheduled trip to Berlin and admitted afterwards that France and Germany were at odds over how to strengthen the firepower of the recently agreed bailout fund.

Yesterday there was no sign that the Franco-German impasse was anywhere near being broken. German MPs followed Chancellor Merkel in opposing French proposals to turn the European Financial Stability Facility (EFSF) into a bank which could obtain funding directly from the European Central Bank and thereby substantially increase its financial clout.

Wolfgang Schauble, Ms Merkel's veteran finance minister, flatly rejected the French proposal yesterday, saying: "This is not up for discussion."

He said Germany would not agree to further EFSF funding beyond levels already agreed by parliament. "There will be no expansion," he said.