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06may10
Sarkozy and Merkel keen to show united front ahead of summit
In a time-honoured EU tradition, the leaders of France and Germany have sought to present a united front ahead of a euro area leaders' meeting this Friday (7 May), despite major differences in opinion on how to deal with the Greek crisis.
In a letter addressed to the presidents of the European Commission and European Council, French President Nicolas Sarkozy and German Chancellor Angela Merkel outlined a list of initiatives they deem necessary to prevent a future repeat of the current turmoil currently buffeting the eurozone.
"For economic and monetary union to remain a success story, dealing with this crisis alone will not suffice. We need to go further in drawing all the lessons and in taking all necessary measures to avoid a repetition of a crisis of this kind," they say in the letter.
"This implies that we re-inforce the co-ordination of our economic policies and the internal surveillance mechanism of the euro area so that each country shares responsibility for the stability of the euro."
Observers say the initiative belies recent tensions between the two sides, however.
While the French government expressed its willingness to come to Greece's rescue early in the day, Ms Merkel appeared to prefer a slower approach, keeping an eye on crucial regional elections taking place this Sunday, and remaining wary of German public opposition to the Greek bail-out.
"It's very obvious that the two leaders would now like to take the leadership. Many commentators in recent weeks have pointed to a lack of leadership regarding the euro area crisis," Zsolt Darvas, a researcher with the Brussels-based Bruegel think-tank, told this website.
Comments made by Ms Merkel in the German parliament on Wednesday suggest a new divide is opening up between Berlin and Paris over the possibility of a restructuring of Greek debt.
France has argued bly against this, in part due to the exposure of French banks, but also saying it would cause untold market turmoil. But Ms Merkel appears to be softening her stance on the issue, telling national deputies on Wednesday that she would like to "develop a structured procedure regarding payment defaults."
Erosion of commission powers?
Many of the ideas contained in the Franco-German letter bear b similarities to proposals the European Commission is set to publish next Wednesday.
At an informal meeting of EU finance ministers in Madrid last month, EU economy commissioner Olli Rehn presented a draft format of the plans for greater economic co-ordination and surveillance, including a toughing up of the euro area's fiscal rules.
But the idea that euro area states and the commission should review each others' national budgets before national parliaments was met with a frosty reception.
It is "quite clear that national budget authority has to remain unrestricted," Germany's deputy finance minister, Joerg Asmussen, said at the time.
Now, in the letter, Mr Sarkozy and Ms Merkel say the commission's proposals will need to be reviewed by a task force headed by European Council President Herman Van Rompuy.
"At the European Council in March, we decided to establish a task force on the measures needed to strengthen and complement the existing framework, exploring all options to re-inforce the legal framework. For this work to succeed, all contributions, including by the commission and member states, need to be assessed jointly by the task force," reads the letter.
The move appears to be an attempt to restrict the commission's initiative next week. "Certainly this implies that there is a risk to commission power," says Mr Darvas. "You cannot interpret it differently."
[Source: By Andrew Willis, Euobserver, Brussels, 06May10]
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