Germany, France Vow to Defend Euro
The German and French leaders vowed Friday to do whatever is needed to defend the euro, but stood by their rejection of the idea of pan-European bonds or an extension of the euro750 billion ($1 trillion) rescue fund.
The two countries, the eurozone's largest economies and its bankrollers, are at odds with many other nations on how best to fight the debt crisis from spreading and forcing more expensive bailouts.
French President Nicolas Sarkozy has held regular consultations with German Chancellor Angela Merkel ahead of a European Union summit next week.
"Let one thing be very clear: We are deeply attached to the euro," Sarkozy said at a news conference. "We will defend the euro, because the euro is Europe."
"Our determination is total, both in Germany and France," he added, saying the nations were prepared to undertake all necessary steps to defend the currency.
A key issue at next week's summit will be the establishment of a permanent crisis mechanism for the 16-nation eurozone starting in 2013. Merkel has pressed hard for such a mechanism, which would include a set of new bailout rules that would force losses on private investors in some cases.
The current euro 750 billion rescue fund — now being tapped to rescue Ireland — expires in 2013, and Merkel opposes extending it without changes.
There has been talk recently of increasing the fund's size, but France and Germany oppose that and Merkel reiterated Friday that the question "doesn't arise," given that the help for Ireland didn't even total to a tenth of the fund's budget.
But Merkel left no doubt that Germany, Europe's biggest economy, was equally determined to defend the 16-nation currency. She said its significance goes beyond solely being a monetary union. "If the euro fails, Europe fails," she said.
Italy and Luxembourg, whose premier also heads the bloc of eurozone nations, have championed the idea of pan-European bonds that would support governments with shaky finances. But financially sound Germany is adamantly opposed, and has been joined in that by France.
"If it's about increasing Europe's debt, that would have the effect of taking responsibility away from each state," Sarkozy said. "We want exactly the opposite — making states more responsible, not less responsible."
Jean-Claude Juncker, Luxembourg's prime minister and Eurogroup chief, has criticized Germany's rejection of the idea.
Juncker was quoted in Thursday's edition of the German weekly Die Zeit as complaining that "our proposal is being rejected before it was even studied."
"That surprises me greatly," he added, according to the report. "This way of establishing taboo zones in Europe and not even dealing with the ideas of others is a very un-European way of getting European business done."