Merkel, Sarkozy seek common ground on EU future

14th June 2010, Comments 0 comments

The leaders of EU heavyweights Germany and France were keen to patch up fundamental differences on Monday on how the bloc should change in response to a crisis that has shaken it to its core.

Three days before a full EU summit, France and Germany are at loggerheads over how to run European economic policy and on the extent of coordination between the 27 members and the 16 countries that use the euro single currency.

Chancellor Angela Merkel and President Nicolas Sarkozy's meeting in Berlin comes a week after a get-together was abruptly postponed due to "scheduling difficulties", fuelling talk of a breakdown in already tetchy relations.

A spat over EU policy after eurozone members scrambled to prevent Greece defaulting on its debt, and to agree a near trillion-dollar rescue mechanism to stop others suffering the same fate, was seen as the more likely reason.

Paris wants what French officials call genuine "economic government" for the eurozone, with regular meetings of the club's leaders and a secretariat to deal with its administration.

Berlin is opposed, preferring instead improved coordination within the wider EU, tougher penalties for fiscal sinners and ensuring the independence of the European Central Bank.

"[The] chancellor's position is that the 27 members states see themselves as part of an economic union who therefore feel responsible for the growth strategy of the whole EU," Merkel's spokesman said Monday.

The EU's new President Herman Van Rompuy appeared to side with Merkel in a visit to Berlin last week, while Italy and Spain have signalled they are erring more towards the French vision.

Paris also sniped at Merkel's 86-billion-euro (104-billion-dollar) austerity plan announced last week, fearing it will dampen the Europe's economic recovery.

A senior official in Brussels dubbed the spending cuts "anti-European", saying that Germany, Europe's biggest economy, needed to do more to boost domestic demand to spur growth across the continent.

Nevertheless, on Saturday, Paris unveiled a saving plan of its own amounting to 45 billion euros over the next three years in a bid to get its public deficit down to more manageable levels.

Both sides have already sought to play down their differences, publishing for example a joint call for faster action on regulating the financial markets ahead of this month's G20 summit in Canada.

In an interview late last week with the daily Frankfurter Allgemeine Zeitung, Merkel said the Franco-German motor was still functioning. "All important decisions have been prepared and taken together," she said.

French officials said the two would likely come to a compromise deal with increased budgetary strictness -- which Berlin wants -- as well as a nod towards Sarkozy's desire for closer economic governance.

"Sarkozy and Merkel have no choice," said a French minister.

"They have to find a deal. A bit more budgetary rigour in exchange for a bit more economic governance.

"Because if there is no agreement at the European Council (summit) on June 17, we will get battered by the markets."

© 2010 AFP

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