Berlin - AFP
German Chancellor Angela Merkel and French President Nicolas Sarkozy vowed Sunday a response to the eurozone debt crisis within weeks, insisting they were united on plans to shore up Europe's banks. Without announcing concrete details, Sarkozy promised, after talks with Merkel in Berlin, "lasting, global and quick responses before the end of the month", amid rampant fears of a crippling credit crunch. Europe must "arrive at the G20 united and with the problems resolved", he said, referring to a November 3 and 4 meet of the world's advanced and emerging economies in the French Riviera resort of Cannes. Closely watched by markets, the United States and European partners, the summit comes amid evidence that some European banks are creaking under the strain of the mounting debt crisis which has pushed Greece to the brink of bankruptcy. US President Barack Obama has warned that the European woes, with their potential to touch off a credit freeze, pose a threat to the global economy and has called on European leaders to act fast to stem it. World Bank chief Robert Zoellick told German business weekly Wirtschaftswoche in its issue to hit newsstands Monday that Berlin had shown a "total lack" of leadership: "The longer it lasts, the more money it will cost and the fewer options for action there will be," he said. After reports that France and Germany, Europe's two economic powerhouses, were at odds over how to proceed on bank recapitalisation plans, Sarkozy said Sunday that "agreement is complete". "An economy is not prosperous without stable and reliable banks," he told reporters after the talks which lasted over an hour and were to be followed by a working dinner. Merkel also said that Paris and Berlin agreed on the recapitalisation of banks, adding they were "decided on doing what is necessary to recapitalise (the) banks in order to assure the granting of credit to the economy". She also said the two countries' banks would be treated "according to the same criteria". Leaders want to prevent any new, bigger reduction of Greece's debt triggering a banking crisis reminiscent of 2008 which set off a global recession. Berlin and Paris had reportedly differed over how to go about recapitalising Europe's banks, which the IMF thinks will need between 100 and 200 billion euros ($135 billion and $270 billion) to cover potential losses. Germany, Europe's strongest economy and effective eurozone paymaster, wants under-pressure banks to first turn to investors for funds before appealing for national or European cash. It wants the EU's 440-billion-euro ($589-billion) European Financial Stability Facility (EFSF) bailout fund to intervene only as a last resort. France, fearful of losing its top-notch AAA credit rating, would rather dip into European funds than its own coffers. Sarkozy said that France and Germany had identified proposals for boosting the EFSF's powers. Press reports say Paris wants the fund to have a banking licence allowing it to rely on the European Central Bank. He also said that Paris and Berlin would propose "important changes" to European treaties, adding he favoured greater integration of the eurozone. Merkel said the "goal is to have closer and more binding cooperation of eurozone countries" to avoid overspending. Troubled Franco-Belgian bank Dexia has already brought Belgium into the line of fire with a warning by credit ratings agency Moody's, while Fitch has downgraded Italy's and Spain's credit ratings. France, Belgium and Luxembourg announced Sunday that they had reached a deal to dismantle Dexia, the first victim of the eurozone debt crisis. The European Central Bank, European Union and IMF are currently deciding on the release of 8.0 billion euros ($10.7 billion), the latest installment of a 110-billion rescue agreed for Greece in May last year. Its release was blocked last month by the auditors, who are currently in Athens poring over the country's books. Merkel called for a "lasting solution ensuring the maintenance" of Greece inside the eurozone. But, both she and Sarkozy declined to go into details before the G20 summit.