French President Nicolas Sarkozy and German Chancellor Angela Merkel met Tuesday to discuss the ongoing financial crisis on European markets and the debt problems facing several member nations in the Eurocurrency zone.
The two leaders agreed, firstly, on the need to create a stronger governing body for the Eurozone that would better monitor policies in the 17 countries that are part of the Euro system.
The strengthened Eurozone government would be headed by current EU President Herman Van Rompuy, who would be given the task of bringing “discipline” to the zone’s members and stabilizing deficits and ensuring better management of fiscal and budget policies.
Merkel and Sarkozy called for the 17 nations that use the Euro to adopt “a golden rule” on deficits and spending by mid-2012 and bring these into line.
They also agreed to push for a cross-border tax on financial transactions that they want to see applied in other EU nations.
“The German and French Finance Ministers will put a joint proposal for a tax on financial transactions on the table of the European institutions beginning next month, in September,” Sarkozy said at a press conference.
Additionally, the two leaders agreed to harmonize their corporate tax systems in 2013.
But there was no agreement on the creation of a “Eurobond” that would serve as a guarantee for the debt of several Eurozone members, a move markets had been calling for and which was said to be favoured by the French but opposed by Germany.
Neither was there any move to increase the USD 620 billion European Financial Stability Facility (EFSF) that was created in July to help Greece and other indebted countries avoid default on debt.
“We created a Euro 500 billion fund… It is far from having been used up. It is normal in a democracy that experts give advice…on doubling the fund. Why not triple it? It is hard to see the point in this,” Sarkozy said at the press conference.
Merkel, for her part, underlined the convergence of views with her French counterpart on tackling deficits, fiscal issues and also about the need to have better governance at European level.
“We have not the right to slow down and we must make the right choices,” Merkel said.
She maintained the Euro was the right choice for Europe and the “source of our (Europe’s) wealth.” European stock markets have been battered over the past month by concerns about high debt levels in countries like Greece, which has received two bail outs from the EU, and in Italy and Spain. Ireland and Portugal have also had to ask for bail outs for their beleaguered public finances since the beginning of the year.