Angela Merkel Faces Uphill Battle To Revise EU's Rules On Bailouts

Angela Merkel, the German chancellor, was struggling tonight to win widespread support across Europe for a major revision of EU law to underpin the multibillion-pound bailout of Greece.

A series of countries spoke out at tonight's EU summit in Brussels against Merkel's demand for voting rights to be withdrawn from member states that fail to meet strict eurozone fiscal rules.

The opposition, which came as David Cameron abandoned a campaign for a freeze in the EU's £107bn budget for next year, means that Merkel is expected to win only a small revision of EU law.

The German chancellor, who had been hoping for a wholesale treaty revision, is expected to secure, at best, a change under a process known as the simplified revision procedure. This needs the agreement of all 27 EU member states but not a full inter-governmental conference, the usual process for revising treaties.

Merkel wants the changes to ensure a legally watertight underpinning of the €110bn bailout for Greece and the wider €750bn bailout for others. She fears the bailouts could be challenged in the German constitutional court unless they are codified in EU law.

Nicolas Sarkozy, the French president, had been wary of the German proposal. But he supported Merkel at a recent Franco-German summit after she agreed that the sanctions would not apply automatically and that the council of ministers could apply its discretion.

Berlin is proposing that voting rights should be withdrawn from member states that fall foul of the target in the growth and stability pact. These are to keep annual deficits no higher than 3% of GDP and to keep debt at no higher than 60% of GDP."