French president Nicolas Sarkozy is to press ahead with the "fiscal shock" plans for his country despite strong reservations from several other eurozone countries.

In an unusual move, the energetic new leader invited himself to a meeting of euro finance ministers last night (9 July) to personally sell his plans for the French economy, amid mounting criticism over the past weeks.

The heated meeting, which saw Germany among the countries opposed to his tax-cutting measures, resulted in Mr Sarkozy presenting a softer line on his plans but not abandoning them.

At a press conference after the meeting, the French president called for an "intelligent and dynamic application" of the stability and growth pact, the rules underpinning the euro.

Referring to his plans to postpone balancing the country's books from 2010 to 2012 - he said he is not asking for the euro rules to be bent specifically for France.

Polish Prime Minister Jaroslaw Kaczynski won a reprieve Tuesday when a disgruntled coalition partner backpedaled on a threat to leave the government -- a move that would have likely brought down the administration.

Leaders of the Samoobrona (Self-Defense) party had threatened to pull out of the governing coalition as retribution for Kaczynski's decision Monday to dismiss party head Andrzej Lepper from his posts of deputy premier and agriculture minister in the wake of a corruption scandal.

But Samoobrona's parliamentary group, which hold 46 seats crucial to Kaczynski's majority, gave the prime minister its support Tuesday -- though the part did set a number of conditions.

"Samoobrona is staying in the coalition, conditionally, as a parliamentary group," Lepper told reporters on Tuesday.

Only a few months after France's new president, Nicolas Sarkozy, hurried to Germany for a show of friendship, Paris and Berlin are again battling for dominance over European aerospace giant EADS. A showdown may be on the agenda for next week.

 Airbus production in Toulouse: A bitter tug-of-war between Germany and France

German Chancellor Angela Merkel was unexpectedly frank in a chat last week with her predecessor, ex-Chancellor Gerhard Schröder. Sipping a glass of white wine at an event on Tuesday, Merkel told Schröder that Germany might soon have trouble with the new French president, Nicolas Sarkozy. Schröder, a glass of red wine in his hand, nodded and listened, having navigated troubles of his own with France. Merkel said Sarkozy had played a constructive role at the European Union summit in Brussels last month because his interests coincided with Berlin's. But it was only a matter of time, she said, before the Germans and French would be at odds again.

FROM THE MAGAZINE Find out how you can reprint this DER SPIEGEL article in your publication. A date for the showdown may already be set. Merkel will meet Sarkozy in Toulouse on July 16. Scheduled as a routine meeting, the mini-summit could flare into something else. Schröder and former French President Jacques Chirac (Sarkozy's predecessor) exploited every chance to show that the two countries enjoyed a harmonious friendship. But the meeting in Toulouse will be anything but a chummy get-together. Sarkozy will try to cement French dominance in the European Aeronautic Defence and Space Company (EADS), the massive public-private parent company of aircraft manufacturer Airbus. The Sarkozy team's plans include nothing less than an assumption of power in the complex French-German company -- which, so far, has been organized to give equal say to Paris and Berlin.

Buyers are being forced to borrow record amounts of money to finance their property purchases
Number of people defaulting on their payments this year has doubled to 77,000 each month
Fears are growing of a dramatic increase in the number of houses that are repossessed By Martin Hickman, Consumer Affairs Correspondent Published: 11 July 2007

Britain faces a mortgage crisis with payment arrears rising sharply as 18 million homeowners struggle to meet the fifth rise in interest rates in less than a year.

It is being predicted that high earners who have stretched themselves to buy a home will join less prosperous social groups in experiencing problems as they juggle finances to adjust to rises in monthly payments.

Research suggests that twice as many borrowers as last year have missed mortgage payments in the past six months. A website, MoneyExpert.com said that, while 36,000 borrowers a month fell into arrears last year, this year that figure will be 77,000.

Fears that homeowners are vulnerable to rate rises intensified when the Council of Mortgage Lenders (CML) said yesterday that first-time buyers were borrowing a record 3.37 times their income and other buyers just over three times.

European Union finance ministers agreed Tuesday to back French candidate Dominique Strauss-Kahn as new head of the international Monetary Fund, the EU's Portuguese presidency said.

"Ecofin agrees to support Dominique Strauss-Kahn for IMF director," the presidency said, using EU shorthand for the meeting of finance ministers in Brussels Tuesday.

 

French President Nicolas Sarkozy, a conservative, had named Strauss-Kahn, a Social Democrat, who failed to win his party's presidential nomination in the 2007 election, as his favorite candidate. Strauss-Kahn served as French finance minister in the past.

 

The nomination means that Strauss-Kahn is likely to get the job since under an informal agreement, Europe chooses the head of the IMF while the US picks the leader of the World Bank.

  

In a surprise announcement late last month, current IMF Managing Director Rodrigo Rato said that he would step down in October.

About 390 CIA-run flights through German airspace were in violation of German law, and Berlin could have collected millions of euros in fines. Now internal investigations could make things embarrassing for Gerhard Schröder's government as well as the United States.

 Buffed clean: The German government stands accused of ignoring illegal "renditions" flights by the CIA.

When air traffic controllers hear the code words "ATFM exempt," they know to expect something drastic. Airlines use the code to report a flight when it has sick or severely injured passengers -- or heads of state -- on board. The code is the air-traffic equivalent of flashing blue lights on a city street.

On July 19, 2002, a Gulfstream business jet took off from Frankfurt am Main bound for Amman, Jordan. The flight received an ATFM exempt, although it carried neither patients nor politicians. Instead, the jet was carrying a CIA team that took a Mauritanian terrorism suspect into custody a short time later and eventually flew him to Guántánamo.

This camouflaging of an illegal kidnapping as a rescue flight was no isolated incident. SPIEGEL has obtained complete lists of the flight plans of secret CIA flights in German airspace, which reveal 390 takeoffs and landings of CIA aircraft at airports in Germany between 2002 and 2006. The documents also show that mis-identifying the flights was part of a system designed to dodge compliance with complicated approval regulations.

The Vatican has described the Protestant and Orthodox faiths as "not proper Churches" in a document issued with the full authority of the Pope.

Anglican leaders reacted with dismay, accusing the Roman Catholic Church of paradoxical behaviour. They said that the new 16-page document outling the "defects" of non-Catholic churches constituted a major obstacle to ecumenism.

The document said that the Orthodox church suffered from a "wound" because it did not recognise the primacy of the Pope. The wound was "still more profound" in Protestant denominations, it added.

It was "difficult to see how the title of `Church' could possibly be attributed to them", said the statement from the Congregation for the Doctrine of the Faith. Roman Catholicism was "the one true Church of Christ".

Fresh from "relaunching" Europe, President Sarkozy took his deal-making skills to Algeria today to promote an ambitious plan for a Mediterranean Union.

Mr Sarkozy's scheme for a cross-Mediterranean tie-up similar to the European Union's common market has hit a wall of scepticism on both sides of the sea and put up backs in Ankara, Beirut and Brussels in particular.

Morocco cancelled Mr Sarkozy's planned stop in Rabat on Thursday. The official reason was a "scheduling problem" but officials said King Mohammed VI was offended that the French leader planned to stay only a couple of hours and only after first visiting Algiers and Tunis.

The President's first trip beyond Europe is being staged in the whirlwind style that he has applied to fixing French problems and to brokering a treaty to salvage the defunct EU constitution. With his trademark salesmanship, Mr Sarkozy claims personal credit for putting the EU back on the rails at last month's Brussels summit.

EUOBSERVER / BRUSSELS - The European Commission has called on EU member states to cooperate more with Brussels on fighting abnormalities with EU funds. A new report shows that over €1 billion of EU money was affected by irregularities and suspected fraud across the bloc in 2006.

EU anti-fraud commissioner Siim Kallas on Monday (9 July) presented the annual commission report on the issue, calling for more timely, precise and complete information from the EU states when they suspect fraud cases.

Without cooperation, the bloc cannot successfully fight cases of fraud and other irregularities, which damage the reputation of the EU, he said.

Under EU law, member states must report suspected fraud or other abnormalities concerning EU cash. But Mr Kallas said the EU capitals were not all taking fraud seriously, while others were too slow in reporting cases.

The Gaddafi Foundation says it has reached a compensation deal with the families of Libyan children infected with the Aids virus that would resolve the case of six foreign medics sentenced to death.   Salah Abdessalem, director of the foundation, on Tuesday said: "This accord satisfied all the parties and puts an end to this crisis." He said the deal was reached between the families and the special aid fund for victims set up by Tripoli and Sofia in 2005 under the aegis of the European Union.   Details would be announced in the coming hours, Abdessalem said. There was no immediate comment from representatives of the families.

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The announcement came hours before Libya's supreme court was due to deliver a verdict on Wednesday on an appeal by the five Bulgarian nurses and a Palestinian doctor convicted of infecting the children.   Stalled negotiations   Snezhana Dimitrova, Nasya Nenova, Valya Cherveniashka, Valentina Siropulo and Kristiana Valcheva have been imprisoned along with doctor Ashraf Ahmed Juma since February 1999.  Negotiations had been stalled over financial compensation for the victims' families in an out-of-court settlement that could allow the medics to escape execution.