• France edition
 
Merkel and Hollande talk ahead of crunch summit
Council of the European Union

Merkel and Hollande talk ahead of crunch summit

Published: 28 Jun 2012 09:41 GMT+02:00
Updated: 28 Jun 2012 09:41 GMT+02:00

Germany's Angela Merkel held last-minute talks with French President François Hollande on Wednesday before a crucial EU summit but warned she would not budge in her opposition to pooling eurozone debt.

In brief statements before the talks here in Paris both leaders made conciliatory gestures, with Hollande indicating he was ready to discuss further integration and Merkel hailing measures to promote eurozone growth.

But there was no sign that Paris was ready to immediately accept closer European political integration and Merkel had already dismissed a key French proposal – eurobonds pooling the bloc's debt – before even arriving in Paris.

"We both want to deepen economic, monetary – and in the future political – union, to arrive at integration and solidarity," Hollande said.

He said the eurozone needed "integration as much as necessary, solidarity as much as possible."

Merkel said the two-day EU summit starting in Brussels Thursday will be "of very great importance for the future of Europe."

"Significant progress has already been made regarding the growth pact," she said, referring to a plan to invest up to 130 billion euros ($162 billion) in kickstarting eurozone economic growth.

"We need more Europe, we need a Europe that works, the markets are expecting this, and we need a Europe whose members help each other," she added.

France and others have pushed the idea of issueing debt backed by the entire eurozone as a means of tackling the crisis, but Germany insists closer political and economic integration is needed first.

"Guarantees and controls must go hand-in-hand. There can only be joint liabilities when sufficient controls have been put in place," Merkel told the German parliament.

"Apart from the fact that instruments like eurobonds, eurobills, debt redemption schemes and much more are not compatible with the constitution in Germany, I consider them wrong and counterproductive."

Merkel's Paris meeting was the latest in a rush of shuttle diplomacy to prepare for the summit in Brussels that will seek to tackle the short-term crisis and thrash out measures to prevent it occurring again.

The centrepiece of the summit is likely to be a repackaging of existing accords into the "growth pact" – hailed as amounting to one percent of European output. 

But leaders will also seek to define the shape of the embattled eurozone for the next decade, seeking closer integration in the form of a banking union and handing powers to the European level for countries' financial sectors and budgets.

European leaders were handed a stark warning by crisis-hit Spain earlier Wednesday, whose prime minister, Mariano Rajoy, said his country cannot continue to finance itself at the high rates it currently pays on the markets.

"The most urgent subject is the subject of financing," Rajoy told parliament.

"We cannot finance ourselves for a long time at prices like those we are now paying," he said, as the yield on Spanish government 10-year bonds traded at more than 6.8 percent.

The warning raised the nightmare scenario that Spain, the eurozone's fourth biggest economy, might need a full-blown sovereign bailout with dire consequences for the rest of the bloc.

And Rajoy warned that the problem of higher borrowing costs, which already forced Portugal, Ireland and Greece to seek multi-billion-euro bailouts, was not limited to Spain.

"There are institutions and also financial entities that cannot access the markets. It is happening in Spain, it is happening in Italy and it is happening in other countries," he said.

As if to prove his point, Italy had to pay investors much higher rates of return at a short-term bond auction later Wednesday.

Spain's central bank also warned that the country's crippling recession was deepening.

After economic output shrank by 0.3 percent in the last quarter of 2011 and again in the first quarter of 2012, the latest data showed further contraction in the second quarter and "at a more intense pace", it said.

In one positive sign ahead of the summit, Italy's parliament approved a controversial labour market reform on Wednesday, in time for Prime Minister Mario Monti to arrive at the meeting with it in hand.

The reform, which Monti's government says is key to restarting growth in the recession-hit economy, should help reassure Monti's EU partners on Italy's commitment to reform.

The International Monetary Fund meanwhile said that Cyprus, which on Monday requested a bailout from the EU to protect its Greek-exposed banking sector, has asked it for financial aid.

"Today, the IMF received an invitation from the Cypriot authorities to participate in the external financial assistance to contain the risks to the Cypriot economy," IMF managing director Christine Lagarde said in a statement.

Eurozone finance ministers said after a conference call Wednesday that they were favourable to Cyprus's request for financial help in coordination with the IMF.

Your comments about this article

Today's headlines
Le Pen: France needs to take control of borders
Front National president Marine Le Pen speaks to the press during a visit in the city of Calais, northern France. Photo: Philippe Huguen/AFP

Le Pen: France needs to take control of borders

National Front leader Marine Le Pen visited the northern port city of Calais on Friday where tensions are high as authorities under increasing pressure to control the influx of illegal migrants trying to get to Britain. READ  

Burglar in the buff snared by French police
A burglar in the buff was snared red handed and bare-bottomed by French police this week. Photo: Shutterstock

Burglar in the buff snared by French police

French police were called out to a bizarre incident this week when they received calls from scared residents in villages in central France alerting them to the presence of a burglar who was targeting homes in the buff. READ  

France to bring in Ebola checks 'on all transport'
A passenger arriving at Charles de Gaulle airport is checked for Ebola. Photo: Kenzo Tribouillard/AFP

France to bring in Ebola checks 'on all transport'

French president François Hollande said on Friday that measures to counter the risk of Ebola reaching France will be increased with tests to be carried out on people arriving in France on “all forms of transport”, meaning boats as well as planes. READ  

French military chief: 'It's safe to say we hurt Isis'
France and its allies "hurt" Isis forces in Iraq, French military chief has said. Photo: AFP

French military chief: 'It's safe to say we hurt Isis'

The leader of France's armed forces said his country's military "hurt" Isis forces in a recent raid led by the international coalition battling the extremists in Iraq. READ  

What's on in France
What's on in France: 11 things to do in November
The annual cider festival in Le Sap Normandy, just one of the many things to do in France in November. Photo: JCMayzaud

What's on in France: 11 things to do in November

If you're short of ideas for what to do in France in November, we've gathered together a list of 11 events that are well worth checking out, especially if you're into art, wine, music or just can't wait to get in the Christmas spirit. READ  

Paris: Saudi robbed of €15k cash while dining
Relations between France and Saudi Arabia could soon be strained if Paris thieves are not stopped. Photo: Dominic Faget/AFP

Paris: Saudi robbed of €15k cash while dining

A man working for the Saudi Arabian embassy in Paris had a whopping €15,000 in cash stolen while dining out in the city on Tuesday afternoon. He’s just the latest Saudi national to be targeted by thieves in France. READ  

Budget row: EU asks France for more details
Hollande and his PM Manuel Valls will have to convince Brussels their 2015 budget is in order. Photo: AFP

Budget row: EU asks France for more details

French President Francois Hollande said his country had received an EU Commission letter asking for clarifications over its 2015 budget, which forecasts that France will miss the deficit targets laid by Brussels by a wide margin. READ  

Vigilantes held as clown panic spreads in France
It's no joke. Clown panic is spreading across France. Photo: Shutterstock

Vigilantes held as clown panic spreads in France

Police arrested five armed youths in a town in eastern France this week who were hunting for “aggressive clowns” who were reportedly threatening locals. It’s just the latest incident in France where reports of armed clowns has spread panic. READ  

Mother has four limbs removed after abortion
A French mum had to have four limbs amputated due to complications following an abortion. Photo: Shutterstock

Mother has four limbs removed after abortion

A woman who had an abortion in Bordeaux is suing the medical team that performed the procedure after she ended up having to have partial amputations to both arms and legs. READ  

France and the EU
France to get €1b EU rebate as UK to pay more
France is owed €1 billion by the EU, in contrast to the UK, which has been told to pay €2.1 billion more. Photo: Luc Legay/Flickr

France to get €1b EU rebate as UK to pay more

Struggling France is owed a €1billion rebate from Brussels, it was revealed this week. It hasn’t gone down well on the other side of the English Channel where the UK has been told to hand over an extra €2.1billion. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
Gallery
IN PICTURES: Nowhere combines sex and art quite like France
National
Why you should never turn down an invitation to a French wedding
Sport
Discover the route of the 2015 Tour de France. There are a few surprises
Gallery
Ten changes that would make learning French so much easier
Culture
IN PICTURES: 'Glass ship' Vuitton ready to set sail in Paris
International
How a giant 'sex toy' earned an American artist a slap in Paris
National
'Unlike in the US the French don't put the blame on the poor'
Gallery
Cover up and don't be too Latin: French travel warnings for the US
Society
Macholand: The online uprising against sexism in France
Gallery
In pictures: The daily life of the 2,000 migrants in Calais
Culture
Erotic promo video earns the Musée d'Orsay our "Only in France" award
International
'I love the UK, but I could die getting there': Struggles of Calais migrants
National
Seven reasons why everyone should work in a bar in France
National
The cost of expat home comforts: How France compares to Europe
International
Why don't Calais migrants stay in France? The Local went to find out
National
What are the pros and cons of working as an au pair in France?
Society
Is France's generous welfare state about to get a little stingier?
Gallery
Extraordinary images of ordinary life in the poor Paris suburbs
Gallery
10 things expats love and loathe about life in France
National
So why don't many women in France breastfeed?
National
'Stop bashing La Belle France' - French PM tells UK press
International
UK warns Brits of 'high threat' from terrorism' in France
National
VIDEO: 'The Kama Sutra is not a dirty little text'
National
What Rome could teach Paris and vice versa
Gallery
What do foreign countries warn their citizens about when visiting France?
Gallery
IN IMAGES: Eiffel Tower opens new glass floor above Paris
Society
Is it really better to grow old in the UK and the US rather than France?
Gallery
It's that time if the year again: French sportsmen reveal (almost) all
Gallery
So what do the French find really weird about Anglos?
Travel
Paris museums to open seven days a week but unions are not happy
Culture
Caption contest: What happened when Jay Z met Sark O?
International
This explains why the French never seem to get a sense of déjà vu?
National
VIDEO: Here's a view from the Eiffel Tower you haven't seen before
Travel
Do Paris's iconic rooftops deserve Unesco World Heritage status?
Opinion
'France cannot reform, the pilots' strike showed us this'
National
'We just don’t work hard enough in France.' Is that true?
International
France has moved to beef up security in various public places
National
Hiking naked in France does not come risk-free
Culture
10 French customs that confuse Anglos
National
IN PICTURES: A look inside France's 'most notorious' prison
International
Isis urges killing of 'spiteful, dirty' French
National
Paris installs new device to stop 'love lock' craze
National
Paris cabby dies in vicious high-heel attack
Latest news from The Local in Austria

More news from Austria at thelocal.at

Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

Latest news from The Local in Germany

More news from Germany at thelocal.de

Latest news from The Local in Denmark

More news from Denmark at thelocal.dk

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

Latest news from The Local in Sweden

More news from Sweden at thelocal.se