“The German government demands, among other things, that the balance of powers between France and Germany in the new entity be guaranteed,” the paper said, citing government sources.

This was just one of a catalogue of requirements that German Chancellor Angela Merkel and the economy ministry agreed on and forwarded to France, the paper added.

Earlier this month Britain’s BAE and European EADS dropped a commercial and political bombshell in announcing they would like to merge to create a $45-billion (€35-billion) aerospace behemoth.

The French government holds a 15-percent stake in EADS and French industrial and media group Lagardere has another 7.5 percent.

If a merger between EADS and BAE were to go ahead, France would have a direct stake of 9.0 percent in the new company.

The German government is ready to buy Daimler’s 15 percent holding and the 7.5 percent stake held by the public-private consortium Dedalus to maintain Franco-German parity, Die Welt said.

Friday’s edition of the Financial Times Deutschland reported that France wanted to hold jointly with Germany a stake that could eventually rise to above 25 percent in any new company, giving Paris and Berlin a blocking minority – an idea that Britain opposes.

“With a joint stake above 25 percent the states would have blocking power in the big group that EADS chief Thomas Enders would like to see privatised,” the FTD said, citing sources familiar with the merger talks.

With the governments enjoying special rights if not holding stakes in the politically sensitive defence manufacturers, there has been growing concern that a deal won’t be worked out before an October 10 deadline imposed by the London Stock Exchange.

While the deadline could be postponed, the companies would still need to disclose where the deal stands.

AFP/hc