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Photo: The Canadian Press. All rights reserved.

European Commission President Jose Manuel Barroso, center, looks at Director General of Business Europe Philippe de Buck during a media conference at an EU summit in Brussels on Thursday, Oct. 18, 2012. European leaders are gathering again in Brussels to discuss how to save the euro currency from collapse and support countries facing too much debt and not enough growth. At left is European Council President Herman Van Rompuy. (AP Photo/Virginia Mayo)

European leaders were drawing battle lines Thursday as they headed for a summit in Brussels, with France pushing back against Germany's call for a new EU czar with wide powers to veto countries' budgets.

In an address to Parliament ahead of the meeting, German Chancellor Angela Merkel endorsed a proposal for the EU's monetary affairs commissioner to become an enforcer of the bloc's budget rules, including the power to refuse member countries' proposed budgets and send them back for changes.

Germany hopes that having a "budget czar", a move that's been bandied about for months, will keep governments from overspending and needing new, expensive bailouts. But some countries, like France, are wary of handing control over their finances to unelected bureaucrats in a foreign capital.

"I am astonished that, no sooner does someone make a progressive proposal ... the cry immediately comes that this won't work, Germany is isolated, we can't do it," Merkel said. She insisted Germany would continue to push for the proposal.

President Francois Hollande of France, increasingly the counterpoint to Germany's weight in the EU, brushed off the suggestion as simply not on the table at this summit.

"The only decision that we have to take, to confirm, is putting in place a banking union by the end of the year," he said. "The first step is a banking supervisor."

Hollande wants the bank supervisor in place because leaders have agreed that, once there is proper supervision, struggling financial institutions will be able to tap Europe's bailout fund directly. That would be a huge relief to countries like Spain, which are facing the prospect of taking on enormous debts — and worrying markets in the process — in order to bail out their banks.

Or at least, it seemed European leaders had agreed to that in June. Since then, Germany, the Netherlands and Finland have muddied the waters and put the brakes on any decision about a banking union.