EU summit delayed to ‘finalise strategy’

NEXT week’s summit of EU leaders has been postponed for a week as France and Germany desperately try to agree a way of refinancing banks.

Meanwhile, the Government has admitted a referendum to change the Lisbon Treaty would be “very difficult” to pass.

Taoiseach Enda Kenny meets Commission president Jose Manuel Barroso in Brussels on Thursday and is expected to reiterate his opposition to any treaty change.

German Chancellor Angela Merkel said it will be necessary to bind eurozone countries into capping their debt and budget deficits.

Reports of a rift between the chancellor and French President Nicolas Sarkozy have been denied following their meeting in Berlin on Sunday evening.

But they have different ideas on where the money should come from to pump into their banks in case of a Greek default.

France will need billions of euro to bring its cash holdings up to safe levels.

Mr Sarkozy fears that if the state has to provide this money to recapitalise the banks, France will be in danger of losing its triple-A rating.

He wants to be able to call on the EU’s rescue fund, the European Financial Stability Facility, which is due to get new powers allowing it to lend to bailout banks.

But Ms Merkel insists this should be an absolute last resort, used only for extreme crisis situations. Instead, she wants banks to first try to raise the funds on the markets or from their government.

European Council president Herman Van Rompuy, announcing the change of date for the summit to October 23, said the delay will allow time to “finalise our comprehensive strategy on the euro area sovereign debt crisis covering a number of interrelated issues”.

This included bank recapitalisation, he said. EU experts are currently finalising the details of how much extra capital banks would need if Greece defaults.

The troika, after a month’s delay, is expected to say shortly whether Athens sufficiently meets the terms of its bailout to draw down the €8 billion tranche it was due to receive last month.

EU leaders want the European Financial Stability Facility in force in case of a Greek default. While all countries have passed the changes to the rescue tool at national level, Slovakia has to decide today and there are fears that its parliament may reject the changes.

In the Dáil, Tánaiste Eamon Gilmore gave a cool reception to calls for changes to the EU treaty.

After the forced revotes on Nice and Lisbon, the Government is keen to avoid another referendum.

“Everyone understands it would be very difficult to get another change in the treaties agreed, other countries ratifying through their legislators would find it equally difficult,” he said. The Taniaste said it would take years to agree treaty changes at an EU level and action was needed urgently.