German Chancellor Angela Merkel and French President Nicolas Sarkozy on Tuesday said they'll press for an “economic government” for Europe, with closer eurozone economic integration, tougher deficit rules and stricter supervision to stamp out the debt crisis.
Ms. Merkel and Mr. Sarkozy rejected euro bonds and expanding the €440 billion ($633 billion) rescue fund. They proposed resubmitting a financial-transaction tax, which was rejected in 2010, that debt limits be written into national law, and that a “euro council,” to be headed by European Union President Herman van Rompuy, be established.
“It's very obvious that in order for this to work we need a stronger convergence in finance and economic policy within the eurozone, and Germany and France are at the vanguard of that effort,” Ms. Merkel said at a joint briefing in Paris after a two-hour meeting with Mr. Sarkozy.
The leaders met as investors clamored for indications that they would do more to end the eurozone debt crisis as their economies sputter. Joint euro-region bond sales may be “imaginable one day,” though they can be only the final step in the process of European integration, Mr. Sarkozy said.
“People always seem to have the feeling that there is one method that will spring us out of the crisis, and in this context there seems to be that the last resource we have is euro bonds,” Ms. Merkel said. “I don't think Europe has come to its last resource, and I don't think we can solve the problem with a single big bang.” Rather, “we need to work steadily and step by step to win back confidence. I don't think that euro bonds will help us now with this.”