A crucial EU summit called to save the euro from break-up, under intense pressure from markets worried about runaway government and banking debts, has reached a difficult crossroads, a senior negotiator says.
According to this source, huge differences are evident on the eve of the talks between the leaders of the 27 European Union states in Brussels as to how to ensure respect of prescribed limits on public spending for governments across the eurozone.
The gap needing to be bridged also extends to negotiations about how to boost a financial firewall to make it big enough to help Italy or Spain should contagion spreading through financial markets since bailouts for Greece, Ireland and Portugal strike again.
"There is no deal, that will have to come down to the heads of state and government" come the summit scheduled for Thursday and Friday, the source said.
This source said that the German government representative at a meeting of "sherpas" - high-ranking officials tasked with paving the way for leaders to conduct face-to-face negotiations - had adopted a "tough" stance.
Germany insists that the EU as a whole must change its treaty to guarantee that states face a legal requirement to behave responsibly vis-a-vis their currency partners.
Another source described the mood of the German negotiator as "fetishist," after rejecting a scheme that would allow the treaty to be changed without putting it to lengthy and costly public consultation, which the source said meant embarking on an uncertain "adventure".
Likewise, Berlin remains opposed to various ideas for boosting the eurozone rescue fund.
All the while, Britain's position in the debate remains "uncertain," according to this high-ranking official.
Non-euro member London has threatened to demand a big quid pro quo from euro partners in exchange for supporting treaty changes that domestic eurosceptics would see as transferring powers to Brussels.
It wants to ring-fence the all-important City of London financial services sector from EU regulation and a proposed EU tax on the sector in years to come, increasing the prospect of a split within the EU.
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