Europe’s finance ministers are gathering in Brussels in another attempt to settle differences about how to handle the continent’s burgeoning debt crisis.
The finance chiefs of the 17 countries that use the euro are meeting Friday to prepare for two summits of the continent’s leaders in the coming week. The European heads of state are meeting Sunday and again next Wednesday to consider their options to stabilize banks faced with massive losses on Greek debt and boost the eurozone’s bailout fund.
Germany and France, with Europe’s two biggest economies, are key to the talks. But so far, German Chancellor Angela Merkel and French President Nicolas Sarkozy have been unable to reach accord on a common plan. They are set to meet Saturday ahead of the first summit.
France is seeking to turn the continent’s bailout fund into a bank that would have access to vast sums of credit from the European Central Bank. But Germany has balked, contending it would diminish the bank’s impartiality. Meanwhile, Germany is advocating that private European banks assume bigger losses on their Greek debt, while France and the continent’s central bank say that would weaken these banks and lead to further turmoil on the world’s financial markets.
The European leaders had hoped to present a comprehensive plan to resolve the debt crisis at the Sunday summit. But late Thursday, Mrs. Merkel and Mr. Sarkozy concluded they would not be able to resolve the stalemate by then and called for the second summit. They said all aspects of the debt contagion would be “profoundly examined” at the Sunday summit, with adoption of a plan no later than Wednesday.
German Finance Minister Wolfgang Schaeuble said “the situation is serious” and that the eurozone finance chiefs have “a great responsibility” to help resolve it.
One of Europe’s leading bankers, Commerzbank chief Martin Blessing in Germany, said Greece should declare itself bankrupt and restructure its debt. He said European banks won’t voluntarily accept bigger losses on their Greek debt unless the country acknowledges it is insolvent.
The Brussels meetings came a day after the Greek Parliament adopted new austerity measures in the face of two days of violent street protests against the government’s latest move to boost taxes and cut wages.
The Greek lawmakers took the action to satisfy the country’s international creditors. The vote virtually ensured that Greece will secure an $11 billion segment of its $159 billion bailout from last year and avoid a default next month on its international loans.
