Merkel And Sarkozy Propose New European Economic Government

My, oh , my! Things are moving fast in the euro zone at the moment. German website of Frankfurter Allgemeine reports Tuesday evening that German chancellor Angela Merkel and French president Nicolas Sarkozy have agreed to propose of a “real economic government” for the whole euro area. The plans are already written, and posted to president of the EU Council, Herman Van Rompuy, according to president Sarkozy.

“We are setting the level for a higher, new phase of cooperation in the euro zone,”

Angela Merkel

Oh, yeah! You sure are Mrs. Merkel. But I can’t help wonder if you have discussed this with other EU leaders, except for you new best buddy Mr. Nicolas Sarkozy?

Germany and France are proposing the creation of a “genuine European economic government” in the euro area, the Frankfurter Allgemeine writes, quoting the French President Nicolas Sarkozy who’s been meeting with German chancellor Angela Merkel in Paris all day.

In a letter to the president of the EU Council, Herman Van Rompuy, Mrs Merkel and Sarkozy suggest that the leaders of the 17 euro countries meet twice annually to a vote in future economic decisions.

“If needed,” Sarkozy says, the committee could meet more frequently. Adding that the chairman of this “economic government”  should be elected on the proposal for a period of two and a half years.

“There must be a greater integration of financial and economic policies in the euro area,” Ms Merkel told reporters in Paris.

“We are setting the level for a higher, new phase of cooperation in the euro zone,” she added.

To settle the debt crisis, Merkel and Sarkozy also require that governments take all the euro area into their constitutions, a rule mandating a balanced budget.

The EU member states should decide the constitutional changes already by summer 2012.

“That’s what we expect,” Mrs Merkel says. Pointing out that the practical side of the common economic government is already agreed on in the European Stability and Growth Pact.

But as the German website, correctly points out, the financial markets will register carefully which countries who undertake such efforts and which are not.

“If the EU Commission makes critical comments, then we want a commitment from the euro countries, this is not easy to put aside, but also to implement,” says Mrs Merkel.

In addition, the French president and the German chancellor reiterated their demand to introduce a financial transaction tax in the EU.

But the idea of introducing the euro bonds is still being rejected.

However, Angela Merkel now – for the first time – talks about a “European Monetary Fund”.

This fund will be – if established – equipped with the capacity to analyse the budget policies of each single euro country.

Well, here’s the link to the original post at www.faz.net.

(And here’s the Google-translation in English)

Here’s a copy of the letter from Mrs. Merkel and Mr. Sarkosy to EU Council president Herman Van Rompuy:

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