EU finance ministers agree to release $7.7bn in pledged funds after Greece proved that it met all necessary conditions.
|President Sarkozy has warned that economic convergence would be long and difficult [Reuters]|
French President Nicolas Sarkozy says he and German Chancellor Angela Merkel will push for European treaty changes to “rethink the organisation of Europe” in order to protect the euro.
In a speech to his party supporters in the southern city of Toulon, Sarkozy said he and Merkel would meet on Monday in Paris to announce their joint debt crisis plan, ahead of the EU leaders summit on December 9
He said the euro could not continue to exist unless eurozone economies pulled together.
“Let us not hide it, Europe may be swept away by the crisis if it doesn’t get a grip, if it doesn’t change,” Sarkozy said.
Europe must be “refounded” he said, with France and Germany at its heart to ensure “a zone of stability”.
Stricter financial discipline was needed, he added, with more severe sanctions for countries which did not meet their responsibilities.
Sarkozy also made a robust defence of measures he has already introduced to tackle France’s debts. He said the country had to end doubts about its ability to pay.
The president’s speech comes amid warnings by analysts that France could lose its triple-A credit rating due to its exposure to the European debt crisis.
Merkel will be laying down her vision on how the EU should work, in a speech to the Bundestag lower house of parliament on Friday.
Al Jazeera’s Tim Friend, reporting from London, said: “We may see fundamental changes to the way the eurozone will work as a result from the summit”.
“One option is to make the ECB provide funds to the IMF to give to some cash starved eurozone countries”, our correspondent said.
“Should not be asked”
Meanwhile the new president of the European Central Bank has said that it is ready to take fresh steps to tackle the euro zone debt crisis in an economic sense, saying risks to the economy have increased.
But Mario Draghi staunchly defended the role of the ECB, as they “should not be asked to do things that are not within the treaty”, he told the European Parliament. “It would be not legal, but also a mistake because… it would undermine the credibility in the ECB,” he added.
Highlighting action the ECB and other central banks took on Wednesday to provide dollar liquidity, Draghi said the bank aimed to ensure inflation did not undershoot or exceed its target of just below 2 per cent.
Draghi said “the ECB’s monetary policy is constantly guided by the goal of maintaining price stability in the euro area over the medium term – and this applies to price stability in both directions.”
Although it was the first time Draghi addressed a full sitting or so-called plenary session of the European Parliament, only a handful of its 736 legislators turned up to listen or ask him a question.
For those who were present, Draghi delivered a sobering message on the economic outlook: “We have observed serious
credit tightening in the most recent period, which combined with the weakening of the business cycle, doesn’t bode at all well for the months to come,” he said.