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Latest update: 07/06/2012
- Angela Merkel - debt - European Union - eurozone - financial crisis
Europe needs ‘reinforced political union’, says Merkel
German Chancellor Angela Merkel said Thursday she would work toward a reinforced political union in Europe "first and foremost," saying that it cannot wait for all nations to be on the same page economically.
By News Wires (text)
AFP - German Chancellor Angela Merkel said Thursday that she would work towards a reinforced political union in Europe with willing partner countries even if that meant a two-speed approach.
"We need more Europe... a budget union... and we we need a political union first and foremost," Merkel told German public television. "We must, step by step, cede responsibilities to Europe."
The German leader, who has been criticised for staunch opposition to some proposals to resolve the eurozone debt crisis, added: "We must not remain immobile because one country or another does not want to follow yet."
On Wednesday, Merkel discussed the crisis with US President Barack Obama and Italian Prime Minister Mario Monti in the latest in a series of calls with global leaders.
British Prime Minister David Cameron also called on Europe Wednesday to come up with an "immediate plan" to resolve the eurozone crisis. Cameron will meet Merkel for further talks in Germany later Thursday.
European Union leaders are under intense pressure from their populations as well to take action to break the back of the two year old crisis at a June 28-29 summit in Brussels.
But Merkel told German television that not all of the bloc's problems could be solved with one summit meeting.
The German chancellor said she did not believe "that one summit is capable of settling everything in one fell swoop."
What she wanted to do at the summit was to propose a framework for getting to a stronger political union, she added.
She explained again how she felt Europe could spur growth to help governments pay down their massive debts and reduce dogged public deficits.
"Budget consolidation and growth are two sides of the same coin," she said.
Sustainable growth could only come from boosting the competitive positions of all EU members, Germany's leader added.
"We must, in each European country, confront our respective weaknesses," Merkel said.
The debt crisis' current focus is on the Spanish banking sector, and Finance Minister Luis De Guindos said Wednesday that Madrid would decide how to fill a massive hole in the banks' finances within two weeks.
Madrid must come up with 80 billion euros ($100 billion) for bank recapitalisations in the midst of a deep recession brought on by the bursting of a Spanish real-estate bubble.
The International Monetary Fund is to report on the state of Spain's banks on June 11, with separate studies by outside consultants including the world's biggest firms of auditors also due over the following week and months.
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Political union? What about today’s Euro crisis?
The continuing crises in the Eurozone make US president Obama, the OECD and also the IMF call for leadership and urgent action in Europe.
What we get instead is Mr. Hollande and Ms. Merkel riding their hobby horses. For the moment, Mr. Hollande is spending his way into popularity and electoral gain. Even if - for example - a (partial) reduction of the pension age goes against all European currents. Ms. Merkel wants a tighter grip on Europe calling for a political union, at the same time indicating that this can only be achieved via a step by step process.
Is this what our European leaders come up with when OECD’s Angel Gurria tells us that our backside is on fire and that we urgently need to sit down in a pool of water? One is occupied with achieving short-term national gains and the other with long-term political power.
Lacking guidance from our leaders, let me then observe that both the urgent solution to the Euro crisis and the long-term framework for Europe will have to take account of various factors. Firstly, solutions must be both financially and politically fair. This means for example that countries which have tightened their belts and increased the pension age to 67 cannot be expected to bail out countries where too many people still live above their means and retire at around 60. Especially not, if these recipient countries want to set the conditions for their bail-out. Secondly, responsible behavior of banks, countries and their citizens should be reintroduced. The European free market system will break down if banks and countries become free riders who expect to be automatically bailed out when the market has punished them after they have taken irresponsible risks. In this context it is not necessarily a bad thing if Greece has to leave the Eurozone and if some of the weak banks will fail. Finally, European institutions will need to become much more efficient before we hand over any further national responsibilities to them.
Bank Deposit compensation Scheme
Good afternoon, On France 24 June 6, 2130 English edition I read "Merkel opposes Bank Deposit Compensation Scheme". Are you referrring to the 100,000 euros per account holder please? Could you please elaborate? Many thanks. Kind regards,
Anna