Euro, EADS loom over Merkel, Hollande anniversary talks

22nd September 2012, Comments 0 comments

The leaders of Germany and France met Saturday to mark a seminal 1962 speech by Charles de Gaulle, hoping to use the occasion to make headway on the euro crisis and a proposed EADS-BAE merger.

Chancellor Angela Merkel and French President Francois Hollande met at the Baroque palace in the Ludwigsburg, southwestern Germany, the city where De Gaulle addressed German youth in a groundbreaking gesture of post-war reconciliation.

Merkel's spokesman Steffen Seibert said the meeting would be largely ceremonial, but a few topical issues were nethertheless likely to be discussed.

"The issue of EADS and BAE will certainly be addressed at the working lunch with President Hollande," Seibert told reporters Friday, referring to the mooted tie-up to create the world's top aeronautics group ahead of Boeing.

"There will of course be no decisions this Saturday and you should not go into the press conference expecting any."

The same applied to the issue of tighter checks on the European banking sector, a focus of eurozone crisis-fighting at the moment, Seibert said.

Governments have been cautious since the announcement last week that the British defence group BAE and European aerospace behemoth EADS were negotiating a merger.

The French presidency has said it was waiting for the merger project to be clarified before passing judgement and taking decisions.

Germany has also taken a wait-and-see approach, with some officials arguing that the bigger company would be better able to compete on the global market while others worry the fusion could end up costing good jobs.

The two groups have until October 10 to finalise the project or abandon it.

France and Germany hold major stakes in EADS, while the British state has a golden share in BAE that allows it to veto deals that it perceives not to be in the public interest.

Meanwhile Paris and Berlin have differing views on common EU banking supervision, seen as crucial to ensuring financial stability.

While France would like to hand the European Central Bank power to supervise all 6,000 eurozone banks from January, Germany would like it to keep an eye just on big banks and is in little hurry, saying thoroughness trumps speed.

The past week has also been marked by shifting opinions on the necessity of a sovereign bailout for Spain, with Berlin and Madrid resisting pressure from Paris and the European Commission for a request for a full aid package.

German Finance Minister Wolfgang Schaeuble insisted Friday that Spain did not need a further aid programme on top of promised loans to recapitalise its banking sector.

He told members of the foreign press that he was "steadfast" in agreeing with the government in Madrid that "Spain is on the right path and needs no further programme".

This drift follows significant divergences laid bare between what Germany and France see as the way forward for the currency area as a whole, going into a trio of difficult EU summits before the year ends.

Saturday's festivities are the latest in a series of events celebrating 50 years of partnership between the wartime foes, now the EU's two biggest economies.

Merkel and Hollande, who have struggled to keep their initial friction to a minimum since the president took office in May for the sake of the EU and the single currency, are to hold a news conference at around 3:00 pm (1300 GMT).

© 2012 AFP

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