The euro area awaits the initiative of the Berlin-Paris tandem
Shaken by a debt crisis that extends to the heart of Europe, the continent once again turns his eyes toward the Franco-German duo for the preservation of the single currency.Chancellor Angela Merkel will meet Tuesday in Paris President Nicolas Sarkozy at a time of high tension for the euro, which was established twelve years ago.After spending 2010 and the first half of 2011 to try to shore up Greece, Ireland and Portugal, EU leaders face a threat far more serious. Spain, Italy and in recent days, France, have in fact suffered virulent attacks on the markets.At first glance, the choices available to Angela Merkel and Nicolas Sarkozy, the conservative age two neighbors but sometimes difficult relations are limited.There is pressure on the Chancellor in Germany so that it resists bold solutions - euro bond issue or increase of the European financial stabilization (EFSF) - that Brussels and other capitals advocated to overcome the crisis . The EFSF currently has 440 billion euros.SOLIDARITYBut the French leader, whose popularity remains at a very low level, less than a year before the presidential election, likely to seek to announce an initiative after a dramatic week in which the titles of the French banks have been damaged and where circulated rumors - denied - that France is seeking about to lose its AAA sovereign rating."Historically, when a crisis has affected France, it caused a strong reaction in Germany. Germany was willing to show solidarity," said economist Jean Pisani-Ferry, director of research center Bruegel in Brussels, referring to the European monetary crisis of 1992."There's strength in the Franco-German relationship and contracts must reflect this."There are less than a month, Nicolas Sarkozy traveled to Berlin before a crucial summit of the leaders of the euro area. After seven hours of interviews, he and Angela Merkel decided several important measures, including a second rescue plan for Greece.But these decisions have not been enough to reassure investors, partly because they can not take effect until approved by national parliaments - which may take until October.At their meeting on Tuesday, followed a press conference at 18:30, the Chancellor and the President should show their determination to implement these measures quickly, although this is largely irrelevant to them.They will also explore ways to reform the economic governance of the euro area, perhaps by voting for regular meetings of its leaders and an enhanced role for the European Council President, Herman van Rompuy, to make a spokesman for the euro.RISKSuch measures could improve discipline among the 17 member countries of the euro area, which has often confused the markets by speaking with many voices.Angela Merkel and Nicolas Sarkozy could also expose new projects to support tax cooperation between Berlin and Paris. The key question is how far they are willing to go in this area.A bold choice would be to issue joint Franco-German bonds, which would send a strong signal about the fact that Europe is moving in that direction.This approach would however not without risk. Markets might see a sign that two categories of public debt in emerging area, and punish accordingly large country like Italy if they were excluded.German officials told Reuters on Friday not to provide spectacular returns of this nature, leaving instead that the meeting would focus on improving governance and integration.Tensions have affected relations Merkel-Sarkozy in 2007, the year of accession to the presidency of the second and peaked at the height of the global financial crisis in late 2008. But after three years in crisis mode, their relationship has evolved and the two partners have learned to work together.The economic success of Germany against the background of crisis have caused France to show him more respect in the past year. French leaders know that without a strong Europe and a Franco-German link foolproof, France may run out of weight on the world.And today, Berlin's support is more necessary than ever to France. "The balance of power within the relationship has clearly turned to the advantage of Germany. In the past, we always spoke of tandem, Germany today is leading the bike and France in the sidecar, "said Ulrike Guerot, head of the European Council on Foreign Relations.
Shaken by a debt crisis that extends to the heart of Europe, the continent once again turns his eyes toward the Franco-German duo for the preservation of the single currency.Chancellor Angela Merkel will meet Tuesday in Paris President Nicolas Sarkozy at a time of high tension for the euro, which was established twelve years ago.After spending 2010 and the first half of 2011 to try to shore up Greece, Ireland and Portugal, EU leaders face a threat far more serious. Spain, Italy and in recent days, France, have in fact suffered virulent attacks on the markets.At first glance, the choices available to Angela Merkel and Nicolas Sarkozy, the conservative age two neighbors but sometimes difficult relations are limited.There is pressure on the Chancellor in Germany so that it resists bold solutions - euro bond issue or increase of the European financial stabilization (EFSF) - that Brussels and other capitals advocated to overcome the crisis . The EFSF currently has 440 billion euros.SOLIDARITYBut the French leader, whose popularity remains at a very low level, less than a year before the presidential election, likely to seek to announce an initiative after a dramatic week in which the titles of the French banks have been damaged and where circulated rumors - denied - that France is seeking about to lose its AAA sovereign rating."Historically, when a crisis has affected France, it caused a strong reaction in Germany. Germany was willing to show solidarity," said economist Jean Pisani-Ferry, director of research center Bruegel in Brussels, referring to the European monetary crisis of 1992."There's strength in the Franco-German relationship and contracts must reflect this."There are less than a month, Nicolas Sarkozy traveled to Berlin before a crucial summit of the leaders of the euro area. After seven hours of interviews, he and Angela Merkel decided several important measures, including a second rescue plan for Greece.But these decisions have not been enough to reassure investors, partly because they can not take effect until approved by national parliaments - which may take until October.At their meeting on Tuesday, followed a press conference at 18:30, the Chancellor and the President should show their determination to implement these measures quickly, although this is largely irrelevant to them.They will also explore ways to reform the economic governance of the euro area, perhaps by voting for regular meetings of its leaders and an enhanced role for the European Council President, Herman van Rompuy, to make a spokesman for the euro.RISKSuch measures could improve discipline among the 17 member countries of the euro area, which has often confused the markets by speaking with many voices.Angela Merkel and Nicolas Sarkozy could also expose new projects to support tax cooperation between Berlin and Paris. The key question is how far they are willing to go in this area.A bold choice would be to issue joint Franco-German bonds, which would send a strong signal about the fact that Europe is moving in that direction.This approach would however not without risk. Markets might see a sign that two categories of public debt in emerging area, and punish accordingly large country like Italy if they were excluded.German officials told Reuters on Friday not to provide spectacular returns of this nature, leaving instead that the meeting would focus on improving governance and integration.Tensions have affected relations Merkel-Sarkozy in 2007, the year of accession to the presidency of the second and peaked at the height of the global financial crisis in late 2008. But after three years in crisis mode, their relationship has evolved and the two partners have learned to work together.The economic success of Germany against the background of crisis have caused France to show him more respect in the past year. French leaders know that without a strong Europe and a Franco-German link foolproof, France may run out of weight on the world.And today, Berlin's support is more necessary than ever to France. "The balance of power within the relationship has clearly turned to the advantage of Germany. In the past, we always spoke of tandem, Germany today is leading the bike and France in the sidecar, "said Ulrike Guerot, head of the European Council on Foreign Relations.
