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October 20, 2011 at 10:52 AM
As the clock ticks down to a weekend summit meeting of eurozone leaders to discuss a plan to deal with the debt crisis, disagreement between France and Germany over the European Financial Stability Facility threatens to bog down the process and escalate the financial crisis.
At issue, according to a Bloomberg report, is the question of whether, and how, to leverage the EFSF. Germany is opposed, and Chancellor Angela Merkel is walking a fine line, that could cost her the chancellorship, between gaining support from her government and battling opposition from Germany’s people, who do not want to pay more for rescuing peripheral euro zone states.
French President Nicolas Sarkozy, on the other hand, has been arguing that to let Greece fail is unthinkable. Leveraging the EFSF to increase its firepower could make all the difference; without a boost, the 440 billion euro ($608 billion) EFSF cannot keep up with the European debt crisis and does not have investor confidence.
