French President Nicolas Sarkozy says that France and Germany will offer a new plan next week to rescue Europe from its debt crisis to save the common euro currency.
Mr. Sarkozy said Thursday night that he and German Chancellor Angela Merkel, the leaders of Europe's two biggest economies, would make proposals on Monday to “guarantee the future of Europe.” He said that “Europe must be refounded.” Ms. Merkel plans to lay out her vision for ending the continent's two-year-long debt crisis in a speech to the German Parliament on Friday.
The French leader, facing a tough re-election contest next April, spoke to his countrymen from the Mediterranean port of Toulon. He said that France and Germany, “after so many tragedies, decided to unite their destiny, to look to the future together.” He said that to do otherwise “would be inexcusable.”
Mr. Sarkozy offered few details of the shape of a new Europe, but said the two countries would push for a new agreement to replace the 1992 Maastricht Treaty that created the European Union and led to the advent of the euro in 1999. It is now the currency for 17 nations, but Mr. Sarkozy said there could be no common currency without “economic convergence,” an apparent reference to greater central control over the budgets of individual eurozone nations.
Any treaty changes would have to be approved by all 27 EU members, 10 of which have their own currencies.
Meanwhile, European Central Bank President Mario Draghi said earlier Thursday that the bank might give new assistance to the continent's debt-ridden governments, but only if the eurozone countries first adopt “a new fiscal compact” to control the spending of individual countries.
Draghi said more centralized oversight of budgets was “the most important element” for the eurozone nations to adopt before the bank would consider increasing its current limited purchases of government debt..
The European debt crisis has threatened the survival of the continent's monetary union, with some analysts suggesting that the demise of the euro would send the world economy into a recessionary tailspin. The eurozone economy is struggling, with one new report showing that manufacturing fell to a 28-month low in November.
The long reach of the debt crisis touched Greece and Spain on Thursday. Greek unions took to the streets in Athens in a 24-hour protest of the austerity policies supported by the caretaker government of new Prime Minister Lucas Papademos. Spain raised more than $5 billion in new funding, but it had to pay its highest interest rate in at least six years.
Stock markets in Asia soared Thursday, continuing a global rally after the world's major central banks took coordinated steps Wednesday to support Europe's troubled economy. European and U.S. markets traded in a narrow range one day after recording huge gains on the central banks' cut in the cost of borrowing U.S. dollars.
Shares in Japan's Nikkei average closed up nearly 2 percent, while Hong Kong's Hang Sang Index surged more than 5.5 percent.
