Reform the eurozone 'step by step': German finance minister

13th August 2011, Comments 0 comments

The eurozone can only be reformed "step by step", German Finance Minister Wolfgang Schaeuble said Saturday, calling for European solidarity to achieve necessary reforms.

"We are going to reinforce the stability pact" but "though we would like to strengthen European institutions straight away, we can only do it step by step", Schaeuble said in an interview with the weekly magazine Der Spiegel released Saturday ahead of publication Monday.

"We must have (Europe's) citizens with us", he added.

"When we created the euro we were not able to simultaneously create a political union, people were not ready", said Schaeuble, often described as the "last European" in Chancellor Angela Merkel's government because of his consistent pushing for European political cooperation.

"In the intervening time, the acceptance to go in this direction has increased" but "it is a process and often a slow and difficult one", he said.

Schaeuble's remarks come three days before an emergency meeting between Merkel and the leader of Europe's other biggest economy, French President Nicolas Sarkozy, where the two leaders will discuss new rules for the eurozone and try to dispel fears that France and Germany could lose their own top credit ratings.

Germany is demanding strict budgetary discipline from eurozone nations and sanctions for countries that mismanage their finances.

Uniting opinion over a course of action is already proving problematic with disagreement between Germany and Italy over the proposed use of eurobonds to alleviate the debt crisis.

Germany has rejected using the bonds, which are issued and traded outside the country whose currency they are denominated in, until European nations have their budgets under control, said Schaeuble.

But Italian Finance Minister Giulio Tremonti on Friday blamed Italy's predicament on the lack of eurobonds.

European solidarity would not, however, extend to pooling debts, Schaeuble said.

"There is no sharing of debts and not an infinite amount of aid (available). There are support mechanisms that we will continue to elaborate under strict conditions", he said.

© 2011 AFP

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