Controversy over cross-border bank regulation and eurobonds have surfaced ahead of the EU summit this week. France and Germany are particularly far apart on the issue, with politicians already trading barbs.
The chances of a harmonious EU summit in Brussels appear slim with France and Germany particularly at odds over some key issues.
One sticking point is likely to be the question of eurobonds, a system of common liability for borrowing that Germany rejects categorically for the time being.
Chancellor Angela Merkel instead wants an institutional solution to the euro crisis to come first, with fiscal and political union through treaty changes.
Wolfgang Schäuble reaffirmed this approach on Tuesday, calling for Brussels to be given the powers to oversee national budgets within 27-member bloc.
"We now need to take greater steps to a fiscal union," Schäuble said, calling for an EU monetary commissioner who is "respected and feared in the entire world."
Any doubt about German opposition to eurobonds at present was dispelled by the country's Europe Minister, Michael Link, on Wednesday.
"You can phrase it any way you like - ‘treasury bills, debt redemption funds or eurobonds' - this type of debt issuance will not fly with our government," Link said.
Berlin's fear is that the introduction of eurobonds would encourage profligate spending, giving financially weaker states access to lower cost borrowing at the expense of Germany and other north European states.
'Quick to talk, slow to action'
In Paris, French President Francois Hollande appeared to take a sideswipe at Germany on Wednesday, saying that a greater sense of urgency was needed in shoring up the continent's finances with eurobonds.
“It hasn't escaped my notice that those quickest to talk of political union were often those the most reticent to take urgent decisions," said Hollande in an interview with six major European newspapers.
However, when asked if he meant the Germans specifically, Hollande said: "No, I'm not pointing at anyone in particular."
France and Germany have also disagreed on the creation of a common banking supervisor for the eurozone's 6,000 banks. French politicians have called for the measure to be agreed as quickly as possible - ideally before the end of the year. Germany, which is not against the idea in principle, argues that the deadline would not be feasible.
The two countries have, however, agreed on the principle of a tax on financial transactions, along with nine other EU states.
The two-day summit begins on Thursday.
rc/jr (AFP, AP, dpa, Reuters)