Merkel, Sarkozy Call for Quicker Debt Crisis Action

Posted January 9th, 2012 at 10:00 am (UTC-5)
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German Chancellor Angela Merkel and French President Nicolas Sarkozy pushed Monday to speed up Europe's efforts to control the two-year governmental debt crisis.

The German and French leaders met in Berlin, then called for a quick conclusion of European Union treaty negotiations to tighten spending controls over individual governments. Mr. Sarkozy said the new budget limits should be signed by March 1, a month earlier than originally planned.

Ms. Merkel and Mr. Sarkozy also said the 17-nation bloc that uses the euro currency should speed up its payments to bolster the eurozone's rescue fund to handle possible future financial emergencies. They urged Greece and its private creditors to conclude their talks on restructuring the country's debts so that the Athens government can secure a new $169 billion bailout, its second in two years, and avoid a default.

The German and French leaders also said they want to impose a financial transactions tax, either throughout the 27-nation EU, or possibly just in the eurozone.

European leaders, with the exception of Britain, agreed in early December to impose new oversight of the spending plans of individual governments. But the details have yet to be worked out.

European leaders have scheduled their next summit for January 30. But various European heads of state are planning to meet with each other in next three weeks to craft terms of the new controls. International Monetary Fund chief Christine Lagarde is meeting Tuesday with Ms. Merkel on the crisis.

The precarious financial state of Greece remains a major concern. Greek Prime Minister Lucas Papademos warned last week that his country could be forced to default and leave the eurozone if it cannot reach an agreement with banks holding Greek debt to sharply cut the amount the country owes them. Greece is faced with imposing more unpopular austerity measures, while Greek unions have rejected a call by Mr. Papademos for wage cuts for workers.

With the uncertainty over resolution of the debt crisis, the euro has slumped markedly over the last several months in comparison to the U.S. dollar. The euro traded at more than $1.45 last July, but now has dipped below $1.28. It slid most of last week, but stabilized Monday as Ms. Merkel and Mr. Sarkozy pushed for quicker action on the debt crisis.