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21 November 2013

Merkel: "Germany is ready to develop the EU treaties further"


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Merkel said that treaty change was needed to create a sense of responsibility among Member States to implement necessary changes. Eurogroup chief Dijsselbloem stressed that France's crisis measures in particular were still "not enough".


Partially translated from the German

Germany must not artificially reduce its strong level of exports, Merkel stressed in her speech on Thursday at the Führungstreffen Wirtschaft (business leaders forum) organised by the Süddeutsche Zeitung. Europe as a whole must become more competitive, and reducing overall debt levels must be a key project over the next four years.

As for the Banking Union, certain steps cannot happen without treaty change, she reported. "Germany is willing to modify the treaties", she declared. "At the very least we have to be ready to improve the euro protocol of the Lisbon Treaty – which only applies to euro states – to allow an institutional cooperation via the so-called community method and not to only be active at intergovernmental level.”

To retain the confidence of investors, transparent supervision of all too-big-to-fail banks in all eurozone Member States is necessary. It is up to politicians to give the European Central Bank the chance to put in place an independent supervisory entity. "We should not stand still, we should ensure today that our house, the euro, is fit to face the storms of the future", declared the Chancellor.

Reuters writes that Germany is attempting to weaken a central plank of Banking Union, namely that the eurozone clubs together to tackle frail banks, for fear that as the richest member it will end up footing much of the bill. Instead, Berlin wants losses imposed on bank creditors, including bondholders, once stress tests identify the weaker lenders.

Merkel is further quoted defending the German surplus against international criticism that it was not doing enough to reduce its high trade surpluses and rejected the idea that it should deliberately weaken its competitiveness. The Irish Times focused on her criticism of EU states that should "not rest on post-crisis laurels". She called for closer economic and financial union while conceding that Berlin was a poor example on this front in the recent past. 

Meanwhile, in an interview with Les Echos and other European papers, Eurogroup Chairman Jeroen Dijsselbloem said: "It doesn’t seem wise to me to propose a 'reward' in return for a reform. Instead, I think one should link the concession of additional time to correct budget deficits to stricter conditions in terms of reform. I will give you more time if you speed [reforms] up. The European Commission may, if a country fails to do so, demand more on budget [adjustment]." The Handelsblatt (subscription required) and cash.ch cite him as having urged the government in Paris specifically to tighten its austerity programme. France has until 2015 to consolidate its budget and to reform the pension system, Dijsselbloem is reported as having said last Friday. "What has been decided up until now is certainly not enough. It is obvious that France must do more."

The country is under pressure to reduce its budget deficit and reform its social systems. The measures taken by the government such as tax increases have angered many French people. The popularity of President François Hollande is at an all time low.





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