Merkel: Crisis 'will take years to fix'
German chancellor Angela Merkel has said there is no easy fix to the European financial crisis, and that a solution will “take years”.
Chancellor Merkel told her country’s parliament that “the German government has made it clear that the European crisis will not be solved in one fell swoop”.
She added: “It’s a process, and that process will take years.”
Chancellor Merkel said she still rejects eurobonds, telling the Bundestag that jointly backed government debt across the eurozone is no solution to the financial crisis.
She claimed the eurozone instead needs a new “stability union” with stronger fiscal controls and debt regulations.
She also told members of the Bundestag that she is sticking to her position that the European Central Bank must remain independent to maintain trust.
The German leader said the goal of the December 9 EU summit in Brussels is to change European treaties “to avoid a splitting of the eurozone and non-eurozone members”.
Chancelllor Merkel said that because the crisis is above all one of trust, to move forward “we need to do away with the underlying deficiencies in the fiscal and currency union”.
“In order to win back trust, we need to do more. Where we today have agreements, we need in the future to have legally binding regulations.”
The eurozone’s budget rules have been violated about 60 times over the past decade by a number of nations – including Germany – but no country has been seriously punished.
To ensure that nations are keeping their budgets in check with the limits of the stability pact – deficits not more than 3% of gross domestic product and overall government debt of not more than 60% of GDP – Germany is pushing for the right to take countries in violation before the European Court of Justice.
“We have to win back that trust that was damaged 60 times,” Ms Merkel said.
In a speech last night French President Nicolas Sarkozy called for a “refounding and rethinking of the organisation of Europe”.
He said that without some new “convergence” among European countries, the continent’s crushing debt could destroy the euro. The French and German leaders are to meet on Monday to finalise their joint strategy ahead of next week’s EU summit.
Stock markets across Europe welcomed the calls for more strict regulations through EU treaty changes, rising overnight on President Sarkozy’s comments. The bond yield for Italy also continued to drop, an indication of improving investor confidence in that country’s financial future.
“The current discussion (about joint bonds) does not contribute to solving the crisis,” Ms Merkel said.
She also hit back at charges that Germany and France are trying to dominate the EU, singling out those nations whose governments have been forced to push through tough austerity measures and praising their efforts.
“I don’t think we can imagine how much these people contribute so that the euro will be a lasting and stable currency,” Ms Merkel said. “I would like to express my absolute respect before these efforts, for that is a contribution to Europe’s future.”
She also rejected an idea floated this week, of taking advantage of a clause in the EU’s constitution to allow the eurozone nations to enact their own treaties for governing the currency, underlining that any treaty changes must include 27 member states.