At a meeting of eurozone leaders in Brussels on Thursday (18.10.2012), a compromise was reached on the creation of a new post for a banking supervisor.

EU leaders agreed that the "political framework" on the new banking supervisor, who would oversee the eurozone's banks, would be in place by the end of the year. The post would be gradually implemented in 2013, with all the currency bloc's banks coming under the supervision of the European Central Bank by 2014.

Earlier Thursday, Germany and France began the summit with completely different aims, and an agreement didn't seem likely.

Germany's Christian Democrat chancellor, Angela Merkel, met with the Socialist French president, Francois Hollande, for a bilateral meeting before the summit, and German sources said they took place "in a good atmosphere." But the differences were significant.

As soon as she arrived in Brussels, Merkel poured cold water on any hopes that anything would come of this summit.

"This won't be a Council meeting at which we will be making any decisions," she said. Instead, Merkel said the EU leaders would be readying decisions for the next meeting in December, and that this summit would simply set things up, "so we'll have plenty to do."

Quickly, thoroughly, or not at all?

Above all, the Germans want to push through more budgetary discipline. They would most like to upgrade the role of the monetary affairs commissioner, so that he would have the power to reject national budgets.

At the same time, Berlin was putting the brakes on the only concrete point on which this summit could agree, namely banking regulation. Only when there is Europe-wide banking regulation can the ESM rescue fund start supporting banks directly, which is what Spain especially wants it to do.

Merkel would rather have this matter dealt with thoroughly than quickly - but she also has principled objections and she's worried that German savers could end up guaranteeing troubled Spanish banks.

However, when Hollande arrived he immediately made it clear that he was against Germany's position. "The issue for this summit," he said, "is the banking union, and not the budgetary union." Hollande wants the banking union in place "by the end of the year."

The French president said the cause of the disagreements was linked to the different electoral timetables in the two countries. "We had our election in May; Ms Merkel has her election in September 2013. I can understand the differences that come from these election dates." But France and Germany had a common responsibility to get out of the crisis.

Two camps

The opening of the summit also showed the two informal camps which Germany and France have built. The Austrian chancellor, Werner Faymann, a Socialist like Hollande, advised Germany, without mentioning it by name, "not to deliberately slow down" banking regulation, but to accelerate it.

And the Belgian prime minister, Elio di Rupo, another Socialist, spoke of a "vicious circle of weak economic growth." He said it was necessary for "every county to help the other to improve its economic performance."

The Germans, though, are more convinced by solid state finance, a view shared by the Conservative Swedish prime minister, Fredrik Reinfeldt. Indirectly, he rejected Hollande's idea of common eurobonds: "For me, Europe is not about sharing debts from the past; for me, Europe is to increase the competitiveness to meet a new world economy."

Britain in retreat

British Prime Minister David Cameron also sees Europe facing worldwide competition which it risks losing; that means "deregulation, cutting the costs of regulation, supporting enterprise, and doing trade deals with the biggest economies in the world. Above all, it means completing the thing that matters most for us in Europe, which is the single market."

But all that showed that Cameron was not very interested in further political integration. In London, the British have by far the most important financial center in Europe, but they don't want to give any further sovereignty to Brussels -- they are in retreat from Europe.

Stability pact: remember that?

Merkel has an unexpected ally in Martin Schulz, the president of the European parliament, who, in spite of his neutral position, never denies that he used to head the Social Democrat group.

Schulz reminded the members states that they once signed a stability pact which they never kept. He said it wasn't that important whether a monetary affairs commissioner or the president of the eurozone ensured more discipline. What was important, he said, was to "achieve the goal that would see members one day commit themselves to respect their own criteria."