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BRUSSELS: EU leaders began a summit meeting yesterday amid sharp French and German differences over how to tackle the bloc’s crisis and as anger over fresh spending cuts boiled over with violent protests in Greece.
Police in Athens used tear gas to disperse protesters as a general strike, the fourth this year, brought transportation across the country to a virtual halt. Five people including two police, were hurt in clashes. A 65-year-old protester collapsed and died from a heart attack.
Differences over how to deal with the three-year euro crisis left Paris and Berlin at odds as the European Union’s leaders went into talks to decide what takes priority — tough austerity or measures to help eurozone states cope with the crisis.
Paris pressed for a single banking union, a key step to allow aid for struggling banks, while Berlin demanded Brussels be given control of member state budgets. Chancellor Angela Merkel told the German parliament that the EU’s economic affairs commissioner should get beefed-up oversight powers.
“We believe ... we could go further by granting the European level real rights to intervene in national budgets,” she said, adding that “unfortunately,” some EU states—unnamed — were not ready for such a step.
Hollande, who has been out of step before with Berlin, was blunt in return. “The subject of the (EU summit) is not budgetary union, it is banking union,” the French president said. “So, the only decision that we must take, or rather confirm, is the setting up of the banking union by the end of the year, and notably the first step, which is banking supervision.”
The French president stressed that a June summit had agreed on measures to put a banking union in place by end-2012 and that it was time to deliver. Merkel however said banking union needed care and attention. “We will stress again that we want to work quickly and of course very thoroughly,” she said.
As leaders arrived, it was clear differences around the rival French and German positions were many and varied, promising to make the summit difficult. Such exchanges reflect continued strains after the June summit—held as the eurozone debt crisis looked set to bring down Spain — agreed the bloc had to accept tighter budget policy coordination if the euro was to survive.
In addition, it agreed to a single ‘banking union’ supervisor by the end of the year, a key step to allow the new European Stability Mechanism (ESM) rescue fund to begin directly recapitalising stricken states’ banks. That would signify an important change as bank aid would no longer threaten to push countries into a full bailout, as Ireland was forced to seek.
But implementation is the sticking point, with many governments reluctant to cede more power to Brussels. There are also serious differences over some of the June summit commitments, especially on the role the ESM can play in dealing with banks that some states — Ireland and Spain, for example — have already bailed out.