Sarkozy meets Cameron on EU debt crisis

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President Nicolas Sarkozy was to hold emergency talks Friday with British Prime Minister David Cameron as France and Germany try to drum up support for a new EU treaty to enforce budget discipline.

France and Britain had been due to hold a bilateral summit, but this was postponed until the New Year to allow the two leaders to concentrate on the immediate threat posed to the world economy by the eurozone debt crisis.

Britain is not part of the 17-nation single currency bloc but is concerned that an implosion of the eurozone would damage its own economy, and fears being sidelined by reinforced Franco-German ties at the heart of the union.

Sarkozy is to meet Chancellor Angela Merkel on Monday and the two are to jointly propose a new EU treaty, which the German leader said would create a "fiscal union with strict rules, at least for the eurozone".

While France and Germany see closer European oversight of national budgets as the key to calming the storm on the bond markets, Cameron is under pressure from his Conservative supporters at home to win back powers from Brussels.

He and Sarkozy worked closely together during NATO's military mission in Libya, but have reportedly clashed in bitter terms over European issues, as Britain seeks to protect its huge financial sector from EU regulation.

In a landmark speech Thursday, Sarkozy made no reference to Britain but instead talked up the primacy of the Franco-German relationship and the euro.

"Europe will have to make crucial choices in the weeks to come," he told thousands of hand-picked supporters in Toulon, adding: "Europe is not a choice, it is a necessity, but it needs to be rethought, refounded.

"We must confront with total solidarity those who doubt the stability of the euro and speculate on its break-up," he declared.

"France is fighting with Germany for a new treaty. More discipline, more solidarity, more responsibility... true economic government" he said, urging members to adopt a "Golden Rule" obliging them to balance their budgets.

Merkel matched Sarkozy's speech on Friday, telling her parliament: "We are not only talking about a fiscal union, we are beginning to create it."

She said the "fiscal union" should lead to a new "European debt brake" to stop countries from spending their way to the brink of insolvency, arguing: "We must strengthen the foundations of the economic and currency union.

"Rules must be respected. Respect for them must be supervised. Their violation must have consequences," she said.

Ahead of Friday's working lunch, which was due to start at Sarkozy's Elysee Palace at 1200 GMT, Cameron's official spokesman said: "Primarily what is being looked at here is rules for the eurozone.

"As with any negotiation in Europe we have to wait and see what is being proposed and see how we will respond. We will always look to further our national interest," he warned.

Cameron is under pressure from the powerful anti-EU wing of his Conservative party to repatriate more powers from Brussels, but he has argued that the eurozone is Britain's biggest trading partner and needs help.

"This is a real worry for our country... If it fails, if the euro fell apart, what you would see is a very steep decline in the GDP, in the economic growth, of all countries in Europe, including Britain," he said Thursday.

But Britain has faced criticism from European nations and from Sarkozy in particular for carping from the sidelines while offering no real solutions.

Cameron was also expected to thank France for helping British diplomats after protesters in the Iranian capital Tehran attacked the British embassy on Tuesday.

© 2011 AFP

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