Franco-German agreement on euro fund; no EU accord: Berlin

20th October 2011, Comments 0 comments

Germany's finance minister said Thursday there was "complete agreement" between Paris and Berlin on the EU's bailout fund but that no accord had yet been clinched at a European level.

"France and Germany have a completely agreed position on these questions, but we know ... that this is not a European solution," Wolfgang Schaeuble told reporters.

"France and Germany have a responsibility to lead in Europe but that does not replace discussions that are being carried out by all 17 member states" that share the euro, he added.

EU leaders are meeting on Sunday in a last ditch bid to thrash out a solution to a debt and banking crisis in the eurozone that has threatened to tip Europe -- and the rest of the world -- into recession.

Officials are engaged in fevered diplomacy before the make-or-break summit. Eurozone finances meet on Friday and EU finance ministers and foreign ministers on Saturday to prepare the meeting.

A mini-summit in Frankfurt on Wednesday that involved French President Nicolas Sarkozy, German Chancellor Angela Merkel and senior EU officials failed to yield a breakthrough, prompting reports of deep divisions.

Schaeuble reiterated that Germany would not be prepared to raise its contribution to the 440-billion-euro (607-billion-dollar) European Financial Stability Facility (EFSF), which currently stands at 211 billion euros of state guarantees.

However, officials were looking at ways to deploy the fund "more efficiently" he said.

Asked if this would involve leveraging the fund, he said: "I don't know. At the moment, we don't have a common (European) proposal. We're working on it.

"The working group of deputy finance ministers -- the so-called European Working Group -- is meeting ... we are in constant contact. There are intensive negotiations," he said.

There has been intense speculation that EU leaders will seek to boost the firepower of the fund to as much as two trillion euros by insuring investors against future losses from their sovereign debt holdings.

Earlier Thursday, Schaeuble's office admitted that differences remained between European countries over the role of the eurozone bailout fund in addressing the debt crisis, in a document obtained by AFP.

"There remains the need for agreement on the guidelines for primary market and secondary market intervention" to buy sovereign bonds of debt-mired countries, the ministry said in a letter to members of the lower house of parliament's budgetary committee.

© 2011 AFP

0 Comments To This Article