European leaders are struggling to overcome a crisis-fighting stalemate, as they face discord over a banking union, Greece's ongoing debate on how to meet bailout commitments, and foot-dragging by Spain on a possible aid bid.
Chancellor Angela Merkel and President François Hollande underlined Franco-German disagreement over the weekend as they clashed on a timetable to introduce joint oversight of the region’s banking sector, with Merkel rebuffing Hollande’s appeal to activate it “the earlier, the better”. The squabbling is helping stem gains in European stocks and bonds of Spain and Italy that followed the European Central Bank’s rescue plan. Deadlock over the banking union could delay until next year a key building block in resolving the crisis, compounding turmoil that’s so far engulfed five of the euro area’s 17 nations.
The differences outlined at the weekend summit underscored Germany’s doubts about placing the ECB in charge of supervision of all banks in the euro area, beginning January 1. German Finance Minister Wolfgang Schäuble led resistance by a group of northern European countries this month at a meeting in Cyprus against what they view as a rush to common oversight.
Another point of contention is the terms on which ailing states should request bailout assistance, with Schäuble warning against a Spanish application. Schäuble said he’s “steadfast” in his opinion that the €100 billion in banking aid for Spain is enough to see it through.
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