Sarkozy, Merkel meet amid rifts on economy

7th June 2010, Comments 0 comments

German Chancellor Angela Merkel and French President Nicolas Sarkozy were set to hold crunch talks Monday to put behind them a row over the euro crisis and thrash out ways to stop it happening again.

Frequent clashes between the two European powerhouses over multi-billion-euro (dollar) bailout packages for Greece and then the wider eurozone have created a difficult atmosphere for Monday's talks, analysts said.

"There are terrible tensions. Merkel and Sarkozy really annoy each other," said Claire Demesmay of the German Council on Foreign Relations.

Paris blames Berlin for dragging its feet over a near trillion-dollar plan drawn up to prevent Greece's fiscal woes from spreading to other vulnerable countries, saying that it pushed up the price of the package.

French officials grumbled that in January, the rescue plan would have cost 15 billion euros versus the around 750 billion euros that were ultimately earmarked.

Moreover, when the plan was eventually agreed, Sarkozy announced to the press that it was "95 percent French," a claim that set off gnashing of teeth in Berlin.

Other rows over economic policy, notably a plea by French Finance Minister Christine Lagarde for Germany to reduce its reliance on exports and boost domestic demand to help the rest of the euro area, have added to the tensions.

The main topic on the agenda of Monday's talks will be on European economic governance.

Sarkozy has called for a European "economic government" complete with a dedicated eurozone civil service setting policy for the 16 countries using the euro.

Merkel firmly rejects such proposals, concerned about the independence of the European Central Bank.

"The old arguments around economic coordination are there again, but this time, the stakes are enormous" for Europe, Frank Baasner, director of the Franco-German Institute in southwestern German city of Ludwigsburg, told AFP.

The talks in Berlin will come on the heels of a meeting of eurozone finance ministers taking place Monday in Luxembourg.

They are expected to settle on measures to strengthen budgetary discipline to fix terms of access to 440 billion euros in emergency government loans for debt-stricken countries.

Monday's huddle between Sarkozy and Merkel -- a regular get-together before EU summits -- will not "at this stage" produce a common position on EU economic coordination, said diplomats from both sides ahead of the talks.

Sarkozy's office strove to play down strains in the "Franco-German motor" of European integration before a key EU summit on June 17 and a meeting of the Group of 20 later this month.

"The Franco-German motor is working. For the past three years, it has been present at all the meetings," said a French official.

And analysts said the mutual tension between the two leaders is in fact often fruitful.

"It's quite good that things are not going so well at the moment," said Ulrike Guerot, head of the European Council on Foreign Relations (ECFR).

"Things had got a bit symbolic and now we need to find concrete solutions. (former French President Jacques) Chirac and (former German Chancellor Gerhard) Schroeder got on very well, but it did not particularly help Europe," she said.

Demesmay added: "This antagonism has already been productive," pointing to a compromise during the Greek crisis between Germany's desire for strict fiscal conditions and France's desire to bail out Athens for the wider European good.

The two leaders were expected to have a working dinner around 1700 GMT, with a news conference two hours later.

© 2010 AFP

0 Comments To This Article