Prior to a stark warning from Prime Minister David Cameron that the crisis is having a “chilling effect” on growth, French president Nicolas Sarkozy reportedly lost his cool and snapped at Cameron: “We’re sick of you criticising us and telling us what to do.”
Last night brought the end of a two-day summit that had already been postponed by a week and which was meant to result in a “comprehensive” plan that would give details of a bigger haircut on Greek bonds, a bank recapitalisation scheme and a boost to the euro bailout fund.
It is thought that a new round of stress tests will result in a bank recapitalisation scheme costing around €110bn, but in the event, no details or confirmation emerged.
Instead, leaders spent much of their time trying to smooth over a row about the inclusion of non-Eurozone EU nations in crisis talks.
EU president Herman Van Rompuy attempted to reassure politicans about the logistics of leaders’ next meeting, now scheduled for Wednesday.
While the original plan had been to include only the 17 Eurozone nations on Wednesday, the ten other EU countries will now also attend a set of talks. EU countries had become worried about being marginalised in decisions that affect their economic welfare.
“Those who share a common currency must take some common decisions related to that currency,” Van Rompuy said. “But it is vitally important to safeguard the union of the 27... We must keep the links between the two types of decision-making as close as possible.”
But despite the display of unity, leaders were manoeuvring against one another behind the scenes. German chancellor Angela Merkel was said to have teamed up with Sarkozy to deliver a rebuke to Italian Prime Minister Silvio Berlusconi for his flip-flopping on Italy’s austerity budget.
Sarkozy is also reportedly furious that Berlusconi has decided to nominate an Italian to plug a hole on the ECB’s executive committee left by Mario Draghi, who takes over as ECB president next week. Italy’s move leaves France with no representation on the committee once current president Jean-Claude Trichet retires.
But there were also tensions between Sarkozy and Merkel after France was said to have folded to Berlin’s demands that the ECB not be involved in bailing out banks or states. Sarko had wanted the Bank to guarantee the region’s bailout fund.