Brussels: EU leaders kicked off a two-day summit Thursday marred by French and German differences over how to tackle the bloc’s crisis as anger over fresh spending cuts boiled over in violence in Greece.
Police in Athens used tear gas to disperse protesters as a general strike, the fourth this year, brought transport 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 but it was not immediately clear if his death was linked to the sporadic bursts of tear gas.
EU president Herman Van Rompuy welcomed leaders to the summit with a hard to beat invitation for all 27 to collect the Nobel Peace Prize awarded last week for European efforts to build peace in the wake of centuries of war.
“We are facing serious difficulties today but we can draw confidence by remembering that the obstacles the builders of Europe had to overcome were frankly more daunting,” Van Rompuy said.
On the hard issues of the day, differences over how to deal with the three-year euro debt crisis left Paris and Berlin at odds over what comes first — tough austerity or measures to help eurozone states cope with the crisis.
Paris pressed for a single banking union, which would ease aid for struggling banks, but Berlin demanded Brussels be given control of members’ budgets to ensure spending stays within limits.
Chancellor Angela Merkel told the German parliament early Thursday that Brussels should have “real rights to intervene in national budgets,” while admitting 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.”
Saying a June summit had already agreed on measures to put a banking union in place by end-2012, the French president said now was the 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 the 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, rather than intervening via government coffers.
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 after it rescued its lenders.
But implementation is the sticking point, with many governments reluctant to cede more power to Brussels.
Officials accordingly played down expectations ahead of the summit, saying it would largely be a stock-taking exercise before a November meeting on the EU’s 2014-2020 budget, and a crucial December summit that is to draft a plan to strengthen economic and monetary union.
In Greece, the strike highlighted popular outrage at the tough austerity measures Athens agreed to implement in return for massive bailouts.
The Greek government says it must adopt even more stringent austerity to satisfy international creditors and so get access to the next installment of its EU-IMF bailout loans.
In Spain, which earlier this year looked as though it too would need a debt rescue, the two main unions said it was likely they would call a general strike for November 14 to protest similar government spending cuts and tax rises.
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