E.U. Postpones Decision on How to Deal With Crisis
October 20, 2011
By JACK EWING, STEPHEN CASTLE AND LIZ ALDERMAN
FRANKFURT — Germany and France, still at odds over a plan for a more forceful response to the sovereign debt crisis, on Thursday put off a decision-making summit meeting for several days amid signs that the complexities of European politics may preclude the kind of all-encompassing resolution that markets crave.
In a statement, a spokesman for Angela Merkel, the German chancellor, said that a summit meeting planned for this weekend would be used to examine proposals to strengthen banks, increase the clout of the euro bailout fund, and better coordinate euro area economic policy.
But a decision will not come until a second summit meeting to be held no later than Wednesday, the statement by a government spokesman, Steffen Seibert, said. The French government issued a nearly identical statement.
The last-minute delay reinforced fears that European leaders are still far from containing a crisis that has become a threat to the world economy. “The politicians have been trying to solve the crisis, but a consistent effort has been missing,” Andreas Dombret, a member of the board of the German Bundesbank, told an audience in Berlin on Thursday, in an unusually sharp criticism by a central banker of his political counterparts.
Analysts agree that a comprehensive crisis package would include further debt relief for Greece, a more convincing bailout fund for the overindebted countries, and some means of removing doubts about the creditworthiness of Italy and Spain.
It would also include a plan to address the underlying causes of the crisis, namely the lack of any effective way to enforce budgetary discipline among euro members, and a plan to restore growth in countries like Greece and Portugal that have lost international competitiveness.
After all the face time that political leaders have already had this week, and plan to have starting Friday evening, the signs of disarray are unsettling. The French president, Nicolas Sarkozy, stoked expectations for progress Wednesday when he flew to Frankfurt for a brief meeting with Mrs. Merkel as his wife, Carla Bruni-Sarkozy, was giving birth to a daughter back in Paris.
The discussions this weekend will begin Friday evening with a meeting of euro area finance ministers. On Saturday, finance ministers from the European Union as a whole will meet. Mrs. Merkel and Mr. Sarkozy will also meet. On Sunday, heads of state or government from the Union, the European Council, will gather in the morning. Then there will be a meeting of just the 17 euro area leaders.
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