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France, Germany clash threatens EU summit

Text by FRANCE 24 (with wires)

Latest update : 2012-10-18

European Union leaders arrived in Brussels on Thursday for talks on how to support the bloc’s struggling banking industry, with France and Germany already making it clear that they disagree on any proposed reforms.

European leaders gathered in Brussels on Thursday to discuss how to save the euro currency from collapse and support countries that are facing too much debt and not enough growth.

But the two-day summit promises to be just a small pit stop on the road to recovery, with few decisions expected. The leaders of the 27 countries that make up the European Union are set to focus on how to support their banking sectors.

Some countries have stepped in to save their failing banks – and are now struggling to save themselves. Several EU members are keen to form a banking union to shore up the industry. But the eurozone’s two superpowers, Germany and France, are bitterly divided on this proposal.

Introducing a unified banking system is a priority for France, with French President François Hollande on Thursday calling for such reforms to be implemented “as soon as possible”.

Germany calls for more oversight

But Germany wants to make sure Brussels has more oversight over the fiscal policies of countries in need of aid from the eurozone's new rescue fund. Before arriving in Brussels on Thursday, German Chancellor Angela Merkel told Berlin’s Bundestag that the European Union's top financial official should have the power to veto member states' national budgets.

“We believe, and I say that for the whole government, we could go further by granting the European level real rights to intervene in national budgets," she told lawmakers.

“Hollande has already said that he will only agree to [Merkel’s proposal] if the treaty also includes the proposed new solidarity mechanism,” FRANCE 24 correspondent Fréderic Simon said from Brussels on Thursday. “But in turn, Germany has already rejected that.”

Speaking from Berlin, FRANCE 24 correspondent Jessica Saltz said that Merkel "made it very clear that Germany will certainly not be rushed on a banking union at this summit” in her speech to the Bundestag on Thursday.

Simon said that no big decisions are expected at the summit, but noted that “we will find out today how far the EU leaders are ready to go down the federalist road”.

(FRANCE 24 with wires)

 

Date created : 2012-10-18

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