German Chancellor Angela Merkel and French President Francois Hollande attempted to put on a united front on the eve of yet another EU summit on Thursday that looked unlikely to produce a lasting solution to the Eurozone debt crisis.
Before a working dinner Wednesday night in Paris, Ms. Merkel and Mr. Hollande sought to paper over their divisions on how to reconcile the French push for greater solidarity among eurozone members with Germany’s insistence that countries first surrender more powers to Brussels.
“We both want to deepen the economic, monetary and later political union to arrive at integration and solidarity — as much integration as necessary, as much solidarity as possible,” Mr. Hollande said.
Ms. Merkel called for “a Europe that works ... where members help each other.” “I say we need more Europe,” she said, “and we’re agreed on that.” Trying to demonstrate that they had inched closer, the two leaders highlighted their agreement on a 130-billion-euro growth pact that EU leaders are expected to endorse at the summit.
Mr. Hollande has declared the pact a victory for his growth agenda — a point Ms. Merkel has conceded.
The French leader consulted Thursday with US President Barack Obama, discussing “the importance of continued efforts to promote growth and stability in the eurozone,” the White House said.
But France, Spain and Italy still have a mountain to climb to convince Europe’s paymaster — Germany — to turn out its pockets in aid of more debt—ridden southern Europeans.
Ms. Merkel told her parliament earlier that solving the crisis would require steps to “treat the problem at the root“: a lack of competitiveness and massive public debt.
Tackling the problem would require leaders to “consistently enforce what we decide,” she said, referring to the stricter rules on spending agreed by 25 European leaders, including Mr. Hollande predecessor Nicolas Sarkozy.
Ahead of Thursday’s summit, EU President Herman Van Rompuy circulated a draft roadmap toward a more federal-style Europe, which proposes more communal risk-taking in return for greater EU powers to police national budgets.
The document proposes eurobonds as a medium-term goal. Not “as long as I live,” was Ms. Merkel’s response.
Even partial debt pooling, through short—term euro—bills or debt redemption funds that would only pool a portion of countries’ debt would be “economically wrong and counterproductive,” she said Wednesday.
There was no agreement in sight on other sticking points, such as calls by Spain and Italy for the eurozone bailout fund to buy up their debt on secondary markets, as a way of driving down their borrowing costs.
Germany opposes the idea.
Under pressure to win concessions at the summit, Italian Prime Minister Mario Monti said he would duck out of a financial transaction tax among a core group of EU members — a proposal pushed by Germany — unless Europe did more to reduce Italy’s borrowing costs.
Spanish Prime Minister Mariano Rajoy, meanwhile, warned that Madrid could not continue paying exorbitant rates for funding for much longer.
Mr. Rajoy said he would urge the EU to use available “instruments” — the bailout fund and the European Central Bank — to calm markets.
The summit “cannot solve all the problem. This will require time,” European Commission President Jose Manuel Barroso said in Brussels.
European Parliament President Martin Schulz pointed to “big differences” on the eve of the meeting and warned against “overloading every summit with historic expectations.”
