Merkel: 'now or never' to resolve euro weaknesses

26th October 2011, Comments 0 comments

German Chancellor Angela Merkel Wednesday said weaknesses in the euro must be addressed now or never, as she fought for MPs' support ahead of a make-or-break 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, I say, never," said Merkel.

"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 that aimed to overcome the debt crisis that threatens to tip the world into recession.

She said the stakes could hardly be higher. "This is the greatest challenge the economic and monetary union has ever had to face."

A healthy Europe was in the interest of Germany, the continent's top economy, she insisted.

"Germany can only be prosperous if Europe is prosperous," she said, reiterating: "If the euro fails, then Europe fails."

Later Wednesday, Merkel faced a vote on plans to boost the 440-billion-euro ($612-billion) EU war chest to fight the crisis, amid fears that it would be insufficient to prevent disaster if Italy were dragged into the mire.

She seemed certain to clinch broad support, with all groupings in the lower house of parliament -- with the exception of the far-left Linke -- vowing to back her negotiating mandate in Brussels to boost the fund.

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 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 the pair could be used in tandem.

The first option would insure jittery investors against potential future losses from 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.

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.

"China is in ... but not yet Brazil, Russia, India or South Africa," he added, referring to the four other countries in the BRICS group of emerging powers.

While the Bundestag vote should pass with cross-party support, Merkel again faces a rebellion from within her conservative grouping, raising the spectre of having to rely on the opposition, which would weaken her politically.

In a similar vote in September, 15 MPs from her centre-right coalition voted against her.

She needs 311 votes from her own 330-strong conservative grouping to secure the crucial majority. "Mrs Merkel needs these 311 magic votes to be able to go to Brussels with her head held high," news weekly Spiegel wrote on its online edition.

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 taking place 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 on Monday was a surprise.

Following the vote, Merkel will 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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