Merkel: 'now or never' to resolve euro faults

26th October 2011, Comments 0 comments

German Chancellor Angela Merkel Wednesday said weaknesses in the euro must be addressed now or never, as she clinched broad parliamentary support before a key EU summit to tackle the euro's debt crisis.

"The fundamental weaknesses and holes in the construction of the economic and monetary union must either be addressed now or ... never," Merkel said.

"And if we address them now, then we will have seized the opportunity this crisis presents us. Otherwise we will have failed," the chancellor said.

On what news magazine Stern called a "day of fate watched anxiously by the whole world," Merkel was speaking ahead of a gathering of EU leaders seeking to overcome a debt crisis that threatens to tip the world into recession.

She said the stakes could hardly be higher in what she called Europe's worst crisis since the end of World War II.

"This is the greatest challenge the economic and monetary union has ever had to face.

"No one should assume that another half-century of peace and prosperity in Europe is a given. It is not. Therefore, I say that if the euro fails, then Europe fails.

"The world is watching Germany and Europe. They are looking to see if we are ready and able to assume our responsibilities during Europe's worst crisis since the end of World War II," she said.

Later, Merkel won a comfortable majority in parliament for plans to boost the 440-billion-euro ($612-billion) EU war chest to fight the crisis, amid fears it would be insufficient if Italy were dragged into the mire.

Deputies voted by 503 to 89 in favour of the proposals, with four abstentions, sending the euro and stocks higher.

Significantly on the domestic political front, Merkel also won enough support from her own centre-right parliamentary coalition not to have had to rely on support from the opposition.

Only 14 coalition MPs defied her, one fewer than during the last key Bundestag vote on EU matters in September.

The parliamentary chief of the opposition Social Democrats, Frank-Walter Steinmeier, also stressed the importance of the summit.

"This summit in Brussels is open-heart surgery and everyone in Germany should hope that it succeeds," he said.

The key aspect for EU paymaster Germany is that there is no actual increase in the 211 billion euros in guarantees it is contributing to the rescue fund.

"That will stay as it is," Merkel said to loud applause.

The text, obtained by AFP, fleshes out two main options for scaling up, or "leveraging" the fund and stresses that both could be used in tandem.

The first option would insure jittery investors against potential future losses on the debt of shaky countries, hopefully encouraging them to continue to buy bonds from the likes of Italy, Portugal and Spain.

The second creates a separate fund with the aim of attracting "a broad class of international public and private investors," including national sovereign wealth funds.

All options involving the European Central Bank, initially pushed by France, were "off the table and no longer being discussed," Merkel said.

She also reiterated that the private sector had to take "significantly higher losses" than previously expected on the write-down of Greek debt.

In a major boost on the day of the summit, two senior EU diplomats told AFP that China had pledged to invest in the fund and Russia also said it was prepared to help out.

The increased level of parliamentary involvement in Germany's EU policy stems from a landmark judgement by the country's top court in September that ruled the legislature must have more say in decisions taken in Brussels.

However, the court ruling implied that only the budgetary sub-committee of the parliament had to vote on such matters and the calling of a full plenary session was a surprise.

Merkel pledged that the Bundestag would again be involved in passing any decisions that arise from the summit.

Following the vote, Merkel was set to fly to Brussels where EU leaders were due to gather from 1600 GMT.

After this meeting, the heads of the 17 eurozone countries will hold talks in a bid to thrash out a solution to what is seen as the worst economic emergency in the EU's history.

"It is going to be a long day," said Merkel's spokesman Steffen Seibert, on microblogging site Twitter.

© 2011 AFP

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