France's Sarkozy warns Europe risks disintegration

 

French President Nicolas Sarkozy: "Never has Europe been in more danger"

French President Nicolas Sarkozy has warned that "never has the risk of disintegration been greater" for Europe in a speech in Marseille.

He was addressing a gathering of European leaders of the centre right.

German Chancellor Angela Merkel said it would take years to overcome the crisis but "we need to have more Europe".

EU leaders are preparing for a key summit in Brussels, where they will be trying to clinch a deal on how to tackle the eurozone debt crisis.

The key proposal on the agenda of the gathering in the Belgian capital later on Thursday is how to enforce budgetary discipline with automatic penalties for those eurozone nations that overspend.

Germany and France are pushing for new European Union treaties, saying stricter fiscal rules should be enshrined there.

Mr Sarkozy said Europe was in much danger.

"Never has Europe been so necessary. Never has it been in so much danger," he said.

Analysis

In the closing remarks to the EPP conference, Mr Sarkozy spelt out exactly what is expected of Europe in the coming 48 hours. If there's a time for speaking frankly he said, it's now. We have only a few weeks to save the euro.

The tone suggested the German and French leaders are not altogether optimistic of finding an agreement among the wider 27 nations of the EU, but if those negotiations break down, said Mr Sarkozy, then we will have a treaty for the 17 members of the eurozone. Coherence isn't everything, he said, but in political life it counts.

The German chancellor said it was time to put aside national egos and national interest. That sounds a worthy argument but in recent days the smaller nations have complained they're being forced to follow the agenda of Germany and France with very little room for discussion.

"Never have so many countries wanted to join Europe. Never has the risk of a disintegration of Europe been so great. Europe is facing an extraordinarily dangerous situation."

He said the eurozone economies still had a few weeks to decide, but that time was working against them.

"The diagnosis is that we have a few weeks to decide because time is working against us. If we aren't in agreement on this, I fear that we won't be able to agree on anything. That's the analysis."

Mrs Merkel has said changes to the European basic treaty are necessary. She said all 27 member states in the EU had a duty to Europe, and had to work together to overcome the crisis in the eurozone.

National egos and interests had to be put aside, she added.

The two leaders were attending the annual congress of the centre-right grouping in the European Parliament, the European People's Party (EPP), in the southern French city.

As the leaders were speaking, the European Central Bank (ECB) cut its interest rates back to their historic low of 1%, as expected by financial markets.

ECB President Mario Draghi called again for governments to cut their borrowing and reform their economies, but did not mention any new financial support from the ECB for struggling governments.

"We have a treaty that says no monetary financing to governments," he said in response to a question on the subject at a post-meeting news conference.

Crisis jargon buster
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The best credit rating that can be given to a borrower's debts, indicating that the risk of borrowing defaulting is minuscule.

Earlier, European Commission chief Jose Manuel Barroso, who is also in Marseille, urged the EU to "do everything" to save the euro ahead of the Brussels summit.

"The entire world is watching. We must do everything" to save the euro, he said, adding: "It is extremely important that we all together, all the EU, show that the euro is irreversible."

Merkel-Sarkozy letter

Mrs Merkel and Mr Sarkozy are seeking to enforce budgetary discipline by changing the existing EU treaties.

"We are convinced that we need to act without delay," the two leaders wrote in a joint letter to European Council President Herman Van Rompuy, adding that the new treaty was needed by March.

The Merkel-Sarkozy letter also called for "a renewed contract between the euro area member states".

The German-French plan is based on the following key provisions:

  • the European Commission to have the power to impose penalties for nations that run excessive budget deficits
  • all 17 eurozone nations should amend their national legislation to require balanced budgets
  • the eurozone countries to have common corporation and financial transaction taxes
  • any future bailouts would not require private investors to absorb part of the costs, as happened in the Greece case

The BBC's Europe editor Gavin Hewitt, at the summit in Brussels, says he has been told it is likely that Mr Sarkozy and Mrs Merkel will sit down for brief talks with UK Prime Minister David Cameron, who is seen as the chief objector.

The UK has said it will veto the proposals unless they protect British interests. The French and German leaders will try to establish where the UK's red lines lie, our editor says.

Mr Van Rompuy is offering an alternative plan, a fast-track "fiscal compact" that does not need lengthy ratification by parliaments or national referendums.

The 10 non-eurozone members of the 27-member EU, including the UK, are concerned they may become isolated if the eurozone nations - driven by Berlin and Paris - decide to move to a new treaty on their own.

However, smaller nations in the EU are concerned that majority voting on a new EU bailout fund would give too much power to France and Germany.

A Finnish governmental advisory committee has said 85% majority voting - as the Franco-German proposal outlines - would be "unconstitutional".

 

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  • rate this
    +3

    Comment number 191.

    Why is Sarkoszy trying to make people feel frightened? I am sick of the word "globalisation" it is just another con. Small is beautiful and easier to manage. The European problem is France and Germany's mess and they can clear it up. Come on Britain we can stand on our own two feet. Don't let the European bullies scare you.

  • rate this
    +3

    Comment number 190.

    Politicians rule by fear . Whether it be financial Armageddon , the threat of terrorists , global warming - they use these things to "rule" us as they think they know best.However history tells us that the "common man" overcomes all these problems when faced with the inevitable and the politicians are shown to have known nothing

  • rate this
    +2

    Comment number 189.

    164.GaiJin888
    "Each euro country retained it's currency linked with an exchange rate to the euro."

    This is a painfully obvious solution which allows the Euro to compete with other internal currencies. The old currencies would only be abandoned when their usefullness to PEOPLE wained. This is a natural market in action - instead the Euro was forced on millions and for many it is innapropriate

  • rate this
    0

    Comment number 188.

    1. What's the harm in being outside the eurozone?
    2. Presumably the budget penalties are for eurozone countries only. Tightening rules for eurozone countries is good.
    3. Private investors should absorb all of the cost of sovereign (or other) defaults/bankruptcies, not some or most! Taxpayer shouldn't absorb any. A MUST!

  • rate this
    +2

    Comment number 187.

    The Germans can call us all the names they like! (see176).

    It says more about German arrogance than anything else. Call us anything you like - in 2 World Wars Germany started, we beat the living daylights out of them - perhaps that's why they call us names?

    Meanwhile, we here are discussing the complete shambles Germany has made of the Eurozone.

 

Comments 5 of 191

 

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