(Updates with date for second EU summit in first paragraph.)
Oct. 20 (Bloomberg) -- European Union leaders gridlocked on how to solve the sovereign debt crisis will hold a second summit on Oct. 26 in an effort to bridge differences between Germany and France.
German Chancellor Angela Merkel and French President Nicolas Sarkozy said in a joint statement that they are seeking a “global and ambitious” strategy to battle the crisis and will meet in Brussels on Oct. 22 before European leaders gather for a meeting there on Oct. 23. They spoke by telephone today. The date of the second summit was disclosed by the EU in Brussels.
Merkel canceled a planned speech to parliament in Berlin tomorrow because of an impasse over proposals to leverage the European Financial Stability Facility to give it more firepower, three German lawmakers said today.
“It’s a disappointing development but without any concrete proposal for increasing the efficiency of the fund the chancellor can’t present a complete set of proposals tomorrow,” Norbert Barthle, the ranking member of Merkel’s Christian Democratic Union party on parliament’s budget committee, told reporters. Other lawmakers confirming cancellation of Merkel’s speech were opposition members Carsten Schneider and Priska Hinz.
“The French want more money from Germany than we are prepared to shoulder,” Otto Fricke, the budget spokesman for Merkel’s Free Democratic Party ally in parliament, told reporters today.
France and Germany are wrangling over the role of the European Central Bank in tackling Europe’s debt crisis. Finance ministers gather in Brussels tomorrow to set a common strategy, with European leaders’ summit.
German lawmakers today said they will not sign off on proposals to enhance the firepower of the EFSF because of the disagreements.
As the summit approaches, the euro-region’s biggest financial backers Germany and France are still at odds over how to expand the EFSF’s firepower, accommodating new tools from precautionary loans to buying bonds in primary and secondary markets. Draft EFSF guidelines, obtained by Bloomberg News today, make no mention of how to boost its 440 billion-euro firepower.
--With assistance from Brian Parkin and Rainer Buergin in Berlin. Editors: Leon Mangasarian, Andrew Atkinson
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