Euro-zone chiefs meet to coordinate on meltdown
2008-10-12

Nations France Germany Luxembourg Ireland Italy Netherlands Japan Belgium Canada City Paris Category Regions Regions Europe Ile-de-France Asia Pacific Rim North America People Nicolas Sarkozy Angela Merkel Event Global Financial Crisis Source (AP)

European leaders meet Sunday in search of a common response to a spreading financial crisis that has ricocheted across the Atlantic to their shores and to try to preserve the bloc's unity.

It could be a complex exercise for the 15 heads of state or government of the euro-zone, where the euro currency is used, because of the varied financial landscapes in each country.

German Chancellor Angela Merkel, stressing the need for a synchronized response, said Saturday that a "common tool box" could be the outcome. Individual countries can use these "tools" to respond to their particular situation, she said.

"We need a common approach in Europe but we must be able to adapt to each national situation in a flexible way," she said after a meeting outside Paris with French President Nicolas Sarkozy.

Both Merkel and Sarkozy stressed that coordination is vital to taming the crisis and putting an end to the go-it-alone approach that has predominated thus far in Europe.

France, the current president of the European Union, and Germany have long been considered the motor for European construction. Decisions made by the euro-zone would likely be later enlarged to include other members of the 27-nation EU.

British Prime Minister Gordan Brown was meeting with Sarkozy ahead of the summit. Britain is not in the euro-zone.

Sarkozy and Merkel each rejected as out of the question any common financial rescue fund based on the U.S. model approved last week.

"The crisis demands extremely rapid responses" and a "European fund would pose gigantic problems" in decision-making among so many nations, Sarkozy said at a news conference with Merkel.

Merkel did not exclude support for banks seeking it but said in that case conditions would be attached. "One cannot talk of nationalization," she said, adding nothing has yet been decided on the subject.

Monday is when decisions should be put into practice nationally, for Germany at least, Merkel said. She called taking things to the national level the "third step" after a weekend meeting in Washington of finance ministers from the Group of Seven -- Japan, Germany, Britain, France, Italy, Canada and the U.S.

President Bush later appealed for a global approach to the crisis that he said was needed in an interconnected world.

So far, European countries have reacted diversely on a case by case basis.

Ireland's unilateral move to guarantee all bank deposits caught other EU nations off balance and fearing a flight of capital to the Emerald Isles.

Britain announced a $88 billion plan to partly nationalize major banks and promised to guarantee a further $438 billion in loans to shore up the banking sector. The Belgian-Dutch bank Fortis got a bailout and so did lender Dexia SA, helped by France, Belgium and Luxembourg.