Chinese Premier Wen Jiabao said in a phone call with European Council President Herman Van Rompuy, "The most urgent task is to take decisive measures to prevent the debt crisis spreading further and avoid financial market turbulence, a recession and fluctuations in the euro."
But delays and finger-pointing also came into play. European leaders agreed to a second summit next Wednesday, as the promise of a major announcement on Sunday collapsed. An EU-China summit planned for Wednesday was canceled.
The chairman of the summit, Jean-Claude Juncker, Luxembourg's premier, said, "It does not appear a bright example of superior statesmanship," and admitted the public might see the summit as "disastrous."
Despite the confusion, a key issue on bank recapitalizing was reached with the largest banks in Europe, numbering about 65, to be required to hold capital cushions of around $111 billion to $125 billion as a safety net in case of further economic deterioration.
To finalize the deal, leaders must resolve a complaint from France, which is asking for nine months or more for its banks to attain the new 9 percent capital ratio target.
Sarkozy, meanwhile, has apparently backed away from a demand to increase the European Financial Stability Facility, the rescue fund for struggling countries, from $611 billion to approximately $2.5 trillion.
The debate centers, technically, on whether to turn the EFSF into a bank or an insurance company and how much of a loss private bondholders of Greek debt should expect.
The "haircuts" or losses for bondholders were capped at 21 percent in July, but discussions now put the figure between 30 percent and 50 percent.
In July, the losses were voluntary and that may be changed to mandatory, which many analyst would say is, by definition, a declaration that Greece is in default.
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