Germany, France scale back ambitions of summit

December 8, 2011 • World News

U.S. Treasury Secretary Timothy Geithner, front, walks out as France’s Finance Minister Francois Baroin, seen background, after their meeting at the Elysee Palace in Paris, Wednesday, Dec. 7, 2011. U.S. Treasury Secretary Timothy Geithner is touring across Europe with a stark message, that the continent’s leaders must act quickly and convincingly to defuse a debt crisis that is threatening the global economy. His visit this week comes on the eve of a summit of European leaders Friday that could yield a plan for resolving the crisis. (AP Photo/Francois Mori)

BERLIN (AP) — German and French officials lowered expectations Wednesday for a deal to save the euro at this week’s European summit, deflating investors’ hopes for an imminent resolution to Europe’s debt crisis.

On the same day that German Chancellor Angela Merkel and French President Nicolas Sarkozy released the details of a plan for European nations to submit their economies to tighter scrutiny, a senior German official suggested a deal could be weeks away.

The summit, which begins Thursday night, has been described as do-or-die for the 17 countries that use the euro. A growing number of eurozone economies are being dragged down by crippling debts.

Further urgency was added Wednesday after the ratings agency Standard & Poor’s threatened to downgrade the bonds of all EU countries because their economies were intricately linked with those in the eurozone. That would likely make it more expensive for governments to borrow.

Earlier this week, expectations had been rising that an agreement would be reached this weekend, paving the way for the European Central Bank to take bolder action to reduce borrowing costs for Italy, Spain and other heavily indebted countries. That would give governments time to strengthen their finances.

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