Merkel and Sarkozy fail to agree plan for saving banks
GERMANY and France failed to reach an agreement at a meeting in Berlin yesterday on how to save Europe's failing banks and end the eurozone crisis.
At a press conference last night, German Chancellor Angela Merkel told reporters that the European leaders would do "everything necessary" to ensure that banks had adequate capital.
French President Nicolas Sarkozy, who was also at the press conference, said the two leaders would deliver a response within weeks that addressed the immediate crisis and what he called the structural defects in the eurozone.
"By the end of the month, we will have responded to the crisis issue and to the vision issue," Sarkozy said. "We have decided to provide this response by the end of the month because Europe must solve its problems by the G20 summit in Cannes," he added, saying it was too early to enter into details.
The leaders suggested that their proposals would include a plan for recapitalising European banks, accelerating economic co-ordination in the eurozone and dealing with Greece's debt problems.
Pressed by reporters, both leaders refused repeatedly to discuss details of their plan. Mr Sarkozy said he and Ms Merkel were in "total agreement" on the recapitalisation of European banks, even though officials in Paris and Berlin have made clear in recent days that the countries are far apart on a solution.
The two eurozone heavyweights have come under pressure worldwide to resolve a crisis which is roiling markets.
US President Barack Obama on Thursday urged Europe to "act fast", calling the common currency bloc's crisis the largest obstacle to a recovery in the US. World Bank President Robert Zoellick said there was a "total lack" of vision in Europe and that Germany in particular needed to show more leadership.
Finance Minister Michael Noonan said at the weekend that European banks could need more than €100bn to withstand the debt crisis. The IMF has said they need double that figure.
Paris wants to tap the eurozone's €440bn European Financial Stability Facility to shore up its banks, worried that pouring its own money into them could compromise its coveted triple-A credit rating.
The failure to come up with a firm agreement is likely to worry markets when they open today. Markets are also likely to be roiled by news that most Germans would like to see a change to the coalition governing Germany
Merkel's CDU party is working on its vision for Europe, 'Spiegel' magazine wrote, quoting a draft of a policy paper for the party's November conference.
According to this draft, the CDU wants more Europe, namely a "completion of the currency union" through greater economic integration. The eurozone should also have a restructuring procedure for members that are unable to fulfil the conditions for a stable common currency despite increased incentives.