Eurozone leaders were on Sunday locked in last-ditch talks to break the stalemate over the Greek crisis amid a growing divide between France and Germany over a potential bailout aimed at preventing Greece from leaving the eurozone, reports The Financial Times.
While Paris is backing Greek plans for a deal, Berlin is leading a group of sceptical countries that insist that Athens first passes significant reform laws in the next few days before negotiations can begin on a new rescue programme.
At stake was not just whether Greece stayed in Europe but “our conception of Europe,” warned François Hollande, French president. France would “do everything to get an agreement tonight,” he added as he arrived in Brussels.
But a grim German chancellor Angela Merkel said: “There’s not going to be an agreement at any cost.” Eurozone leaders, she added, would consider “nothing more and nothing less” than the preconditions for a Greece rescue by Europe’s bailout fund — a stance which appeared to cast doubt on whether a full accord would be possible on Sunday.
The split between the eurozone’s two dominant powers threatens to leave Greece’s future in the eurozone unclear when financial markets open on Monday — and to strain Ms Merkel and Mr Hollande’s recent efforts to bolster the EU’s key political alliance. However, their comments as Sunday’s talks intensified left room for manoeuvre, perhaps allowing a conditional deal which would allow negotiations on a bailout to start if Greece made more progress passing reform legislation in the next few days.
Jean-Claude Juncker, European Commission president, who last week admitted that the EU’s executive arm had been working on a so-called Grexit plan, said: “I will fight until the very last second to have a deal and I hope there will be a deal.”
Highlighting the drama, Luxembourg has warned Germany that pressing for Grexit would bring “a profound conflict” with France and “catastrophe for Europe”. Jean Asselborn, foreign minister, told the Süddeutsche newspaper that it would be “fatal for Germany’s reputation in the EU and the world” if Berlin did not seize the chance offered by the Greek reform plan.
Erik Nielsen, chief economist at UniCredit, said: “It’s no longer just about Greece, but the deeper divide on the future structure of — and relative power in — Europe has been revealed. Germany and France have drawn the battle lines.”