The Euro to Collapse? Nicolas Sarkozy Threatened to Pull out of Euro over Greece row
French president Nicolas Sarkozy threatened to pull out of the euro unless Angela Merkel dropped her hostility to the EU´s safety net plan.
French president Nicolas Sarkozy warned of damage to Franco-German relationship if Angela Merkel opposed EU plan
Nicolas Sarkozy threatened to abandon the euro unless Angela Merkel dropped her hostility to the EU´s €750bn safety net for the single currency, sources in Brussels and European capitals said yesterday.
In a confrontation between Europe´s two most powerful politicians, the French president said he would walk out of the talks and warned of lasting damage to the Franco-German relationship unless the German chancellor backed the plans.
"It was a standup argument. He was shouting and bawling," said one official in Brussels. "It was Sarkozy on steroids," said a European diplomat. "He´s always very energetic. This time he was very emotional, too." The French leader banged his fist on the table, according to yesterday´s El País newspaper in Spain.
The showdown, late on Friday last week, kicked off a momentous week in Europe, raising fears – shared strongly in Washington and elsewhere – that the euro could collapse, wreaking untold damage on the world economy and also raising questions about the very future of the EU.
Merkel warned on Thursday that the single currency crisis triggered by Greece´s debt debacle was about much more than money. "If the euro fails, it is not only the currency that fails. Much more fails," she said. "Then Europe fails. The idea of European unity fails."
Sarkozy´s ultimatum came at a Brussels summit of leaders of the 16 countries in the single currency. It was called to rubber-stamp a €110bn rescue package for Greece, but was overtaken by events.
The financial markets were targeting Spain and Portugal and the Greek emergency had escalated into a full-blown euro crisis. After months of handwringing, the leaders had to come up with a much bigger deal to underpin the euro. By 11.30 pm, several sources said, the summit was deadlocked, with Merkel digging in against a rescue fund to which Germany would need to contribute at least €120bn.
Diplomats at the time reported that the summit was going very badly and would continue through the night.
But it ended half an hour later after Sarkozy abruptly announced he was leaving. "Sarko said: ´For me it´s over. I´m stopping this if we can´t agree,´ " said a diplomat.
Sarkozy came downstairs and staged a triumphalist press conference, announcing a radical breakthrough, an agreement that was "95% French".