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France - Germany

Sarkozy and Merkel agree deal ahead of crucial eurozone summit

Reuters

After talks which went on late into the night on Wednesday, French president Nicolas Sarkozy and German Chancellor Angela Merkel have agreed a joint position, ahead of crucial talks today on the terms of a second bailout for Greece.

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Officials refuse to give details of the agreement before the meeting.

European Central Bank governor Jean-Claude Trichet, who has previously warned against any arrangement which would lead to a Greek debt default, also participated in the seven-hour meeting.

Earlier on Wednesday, European Commission president José Manuel Barroso warned that if they fail to resolve the crisis “history will judge this generation of leaders harshly”.

He declared that the crisis required a response “otherwise negative consequences will be felt in all corners of Europe and beyond.”

Nervous financial markets are keenly awaiting the outcome of the summit, as the euro-zone debt crisis threatens to engulf Italy and Spain, its third and fourth largest economies.

Angela Merkel had unsettled markets on Tuesday by downplaying expectations that the meeting would result in a real breakthrough.

The European Union and the International Monetary Fund have already provided a 110-billion-euro bailout to Greece, which has proved insufficient.

Since then both Ireland and Portugal have also received multi-billion-euro rescue packages.

Germany, backed by the Netherlands and Finland, has been at odds with the European Central Bank and Paris over Merkel’s demands for private investors to shoulder some of the bill for the second Greek rescue.

 

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