[QODLink]
Europe
Sarkozy and Merkel call for new EU treaty
French and German leaders say they want new agreement, with automatic punishments for states who overspend, by March.
Last Modified: 06 Dec 2011 04:33

The leaders of Germany and France have agreed on the need for a new European Union treaty to set out mechanisms for controlling the budgets of eurozone members.

After talks in Paris, Angela Merkel and Nicolas Sarkozy, the leaders of the single currency bloc's largest economies, said they wanted a new treaty by March which would include automatic punishments for governments that overspend.

French President Sarkozy said that the new proposals would include a modified EU treaty, ideally for all 27 EU members, but that they were also ready to draw up a treaty for the 17 members of the eurozone single currency bloc, though this would be open to others.

The two leaders told a news conference that they would ensure "imbalances" that sparked the crisis in the eurozone were not repeated.

"We want to make sure that the imbalances which led to the situation in the eurozone today cannot happen again," Sarkozy said.

"Therefore we want a new treaty, to make clear to the peoples of Europe, members of Europe and members of the eurozone, that things cannot continue as they are."

'Remarkable detail'

German Chancellor Merkel wants eurozone states to surrender budgetary control to a European authority with veto power, which would require changing the EU treaty.

As announced, France had wanted governments to have control of imposing sanctions on member states who fail to observe budgetary rules.

Al Jazeera's Jacky Rowland, reporting from the French capital, said that for the first time, after months of uncertainty and apparent dithering and disagreements over how to respond, the two leaders spoke in greater detail about how they intended to tackle the crisis

"We're used to these meeting ending with vague statements, not specifics. Here we had a whole list," our correspondent said.

Details of the Merkel-Sarkozy plan would be put in a letter to be presented to the president of the European Union and to individual national leaders for approval, she said.

"I think, really, the key quote was from both ... Sarkozy and Merkel where they repeated what has happened must not happen again. Very specifically what happened in Greece must not be allowed to reproduce itself," she said.

'Merkozy'

IN VIDEO


Al Jazeera speaks to Clem Chambers, CEO of ADVFN, a European financial website, about the EU economy

The duo, increasingly dubbed "Merkozy" as they intensify bilateral efforts to restore confidence in the battered eurozone, had held discussions over lunch, their latest attempt to fix a crisis that is threatening trigger a global financial crisis.

Mario Draghi, the chief of the European Central Bank, signalled that a eurozone "fiscal compact" could nudge the bank to act more decisively to fight the crisis.

European markets responded positively to the announcement, with London's FTSE closing up 0.28 per cent, Germany's DAX gaining 0.42 per cent and Paris' CAC up 1.15 per cent.

But credit agency Standard & Poor's increased the pressure on European Union leaders to reach agreement on tackling eurozone debt by placing 15 eurozone states, including Germany and France, on "credt watch negative", meaning they could be downgraded.

Analysts cautioned that opposition in other eurozone states to a more intrusive and stringent fiscal regime could yet derail a rescue plan that has eluded eurozone leaders for two years.

Source:
Al Jazeera and agencies
Topics in this article
People
Country
City
Organisation
Featured on Al Jazeera
Your chance to be an investigative journalist in Al Jazeera’s new interactive game.
An innovative rehabilitation programme offers Danish fighters in Syria an escape route and help without prosecution.
Street tension between radical Muslims and Holland's hard right rises, as Islamic State anxiety grows.
Take an immersive look at the challenges facing the war-torn country as US troops begin their withdrawal.
Featured
Private citizens take initiative to help 'irregular' migrants, accusing governments of excessive focus on security.
Indonesia's cassava plantations are being killed by mealybugs, and thousands of wasps will be released to stop them.
Violence in Ain al-Arab has prompted many Kurdish Syrians to flee to Turkey, but others are returning to battle ISIL.
Unelected representatives quietly iron out logistics of massive TPP and TTIP deals among US, Europe, and Asia-Pacific.
Led by students concerned for their future with 'nothing to lose', it remains to be seen who will blink first.