Next Score View the next score

    European leaders still divided as debt crisis talks open

    Chancellor Angela Merkel of Germany spoke with Prime Minister Mario Monti of Italy at the EU summit in Brussels on Thursday.
    Michel Euler/Associated Press
    Chancellor Angela Merkel of Germany spoke with Prime Minister Mario Monti of Italy at the EU summit in Brussels on Thursday.

    BRUSSELS — President Francois Hollande of France arrived here Thursday for a crucial European Union summit meeting demanding ‘‘rapid solutions’’ to the euro’s problems, but Chancellor Angela Merkel of Germany gave no sign of budging on any quick fixes — illustrating the deep divisions as European leaders try to restore faith in the single currency.

    Heading into the two-day meeting, Merkel brushed aside questions about the mounting economic pressure on Spain and Italy, both of which saw their borrowing costs spike again Thursday to ever-more-painful levels that are not sustainable in the long run.

    Hollande showed no such reticence.


    “I have come here to get very rapid solutions to support those countries that are in the most difficulty in the markets and that have made considerable efforts to shore up their public accounts,’’ he said.

    Get Talking Points in your inbox:
    An afternoon recap of the day’s most important business news, delivered weekdays.
    Thank you for signing up! Sign up for more newsletters here

    European Union summit conferences were once scripted by the governments in Paris and Berlin, which often dictated the course by releasing a ‘‘Franco-German letter’’ just before other leaders arrived. But despite repeated meetings in recent days, there has been no far-reaching French-German proposal, which the two leaders promised on the day six weeks ago that Hollande became president.

    Merkel has given him the growth pact that he demanded during his election campaign, but it is largely made up of existing funds. There has been little effort to disguise their differences over sharing liability, through collectivized debt, to avert a eurozone breakup and take the pressure off Spain and Italy.

    ‘‘The current disconnect between Paris and Berlin is destabilizing the euro,’’ Charles Grant, the director of the Center for European Reform, a research organization in London, wrote this week. ‘‘In the long run the euro is not sustainable without a grand bargain between France and Germany.’’

    Approval of the growth pact, expected Thursday night, was delayed by disagreements ranging from the mundane — disputes over a European patent office — to the more fundamental, with Italy and Spain insisting on a more urgent discussion of short-term measures to ease their financial strains. That is a topic for Friday, but European officials said the Italian prime minister, Mario Monti, and the Spanish prime minister, Mariano Rajoy, wanted to drive home the importance of their concerns, especially to Merkel.


    Monti told the other leaders that Italy would not agree to any other issue here until there was serious discussion of how the union can help bring down interest rates on Italian bonds, a European official said.

    While Hollande’s predecessor, Nicolas Sarkozy, sought to influence Germany and moderate its dominance by sticking close to Merkel, the new French president has cultivated the Italian and Spanish leaders as allies to try to outnumber her. Neither tactic has worked.

    As usual in European summit meetings now, scheduled briefings were postponed and then canceled, as leaders continued their discussions into dinner.

    In a speech Wednesday to German lawmakers, Merkel argued that short-term solutions such as pooled debt would be counterproductive without the construction, first, of a political and economic union among the member states in the eurozone. Without mutual responsibility and control over national budgets, she argues, there cannot be mutual liabilities that can turn into blank checks.

    While Italy and Spain make vital economic changes, they may simply have to put up with higher borrowing costs, German officials say. At the same time, a senior German official, speaking anonymously so as not to upstage Merkel, said Italy and Spain could use existing bailout funds, under conditions, to back up their borrowing and insure bond buyers against losses. Germany would prefer that Italy and Spain use existing mechanisms instead of inventing new ones, a position echoed by Dutch Prime Minister Mark Rutte.


    The European Union gathering has goals for both the short and longer term — to ease the pressure on Spain and Italy but also to lay the groundwork for increased integration of the eurozone.

    The leaders here aim to agree on the outline of a banking union and sign off on the growth pact, which would deploy up to $173 billion, mostly from unspent EU funds.

    The leaders will also discuss proposals for the future of the euro drafted by the heads of the major European institutions and released Tuesday.