Chancellor Angela Merkel, badly stung by German voters, faces a bruising fight with the new French president on Tuesday over crisis in the eurozone, as Greek brinkmanship raises a risk of break-up.
With political paralysis in Greece raising the spectre of the country being forced from the eurozone, Merkel welcomes Francois Hollande to Berlin hours after his inauguration as French president, aiming to reconcile differences on austerity and the route to growth.
Hollande rode to victory in France on a platform of bolstering growth as a way out of the debt crisis, setting him up for a showdown with Merkel, who has championed austerity as the best way forward for the 17-nation eurozone.
And despite recognising a “bitter, painful defeat” in Sunday's election in Germany's key state of North Rhine-Westphalia, where her conservatives suffered their worst ever defeat, she insisted her Europe policy “was not affected.”
She insisted there was “no conflict between solid budgetary policy and growth”, refusing to back down after some attributed the crushing poll result to Merkel's tough stance on austerity.
While both sides have observed the diplomatic niceties ahead of the meeting, with Merkel saying she would welcome Hollande “with open arms”, the two are on a collision course over the German-inspired EU fiscal pact.
Merkel's brainchild, the pact aims to enshrine greater budgetary discipline in the eurozone but Hollande vowed during his election campaign to renegotiate the pact, ruffling feathers in Berlin.
The chancellor insisted almost daily last week that the pact, signed by 25 of the 27 EU countries and already ratified in some, must stay as it is.
The two might also clash over eurobonds. Hollande initially championed the pooling of eurozone countries' debt but Merkel is implacably opposed to such a path, fearing EU paymaster Germany will be left to pick up the bill.
Hollande has since diluted his position, calling instead for new EU “project bonds” to fund large job-creating infrastructure projects Äwhich may be more palatable for Germany.
The role of the European Central Bank could also spark tensions. Hollande wants to see the Frankfurt-based institution do more in the crisis. Merkel is fiercely attached to the ECB's independence.
And the two do not see eye-to-eye on Afghanistan either, with Hollande seeking an early withdrawal of French troops and Merkel pointedly telling Germany's parliament that international forces must stay the course until 2014.
Both have their own domestic reasons for appearing not to give ground. Hollande faces legislative elections in June and Merkel has been bruised by Sunday's electoral humiliation.
“We have positions that are not yet converging,” Hollande admitted on Thursday in guarded diplomatic language.
Despite their policy differences, however, many analysts have pointed out that their styles and personalities may gel better than those of Merkel and Sarkozy.
Both prefer to take decisions only after long deliberation, say insiders.
Moreover, Hollande, who has set himself up as 'President Normal' to contrast with Sarkozy who was dubbed the 'bling bling' president, may get on better with the famously down-to-earth Merkel.
“Hollande and Merkel are more similar than their squabbles of recent months suggest ... both are sober, reflective, pragmatic and unpretentious,” commented the Sueddeutsche Zeitung daily.
And Merkel has been eager to play down expectations for the talks, saying in her weekly podcast it would be more of a “getting-to-know-you” gathering than a major decision-making summit.
“They might not embrace as warmly as she did with Sarkozy, but Hollande is a pro-European social democrat and as such, I think both sides will be prepared to compromise,” said political scientist Gerd Langguth from Bonn University.
But comments by socialist party spokesman Benoit Hamon suggest the untried Hollande's desire to make his mark on the world stage may yet cause Franco-German differences to burst out on Tuesday.
“We didn't vote for an EU president called Mrs Merkel who makes sovereign decisions for the rest of us,” Hamon fumed Sunday. “We want to renegotiate this pact. ... Austerity led Greece into failure.” - Sapa-AFP