Barroso, Rehn Excited by Merkel-Sakozy Euro Zone Govt Proposal

Olli Rehn (L), European Monetary Affairs Commissioner, and European Commission President Jose Manuel Barroso (R) during a plenary session of the European parliament in Brussels, Belgium, 23 March 2011. EPA/BGNES

EC President Jose Manuel Barroso and EU Commissioner for Economic and Monetary Affairs Olli Rehn have welcomed the new Merkel-Sarkozy initiative on for an integrated economic government of the Euro Area.

Barroso and Rehn issued late Tuesday night a statement on the proposals put forth earlier the same day at a joint news conference in Paris by French President Nicolas Sarkozy and German Chancellor Angela Merkel.

The new Merkel-Sarkozy plan detailed three main proposals: setting up an "economic government" for the euro zone, with a fixed president and regular leaders' meetings; getting all euro zone members to adopt constitutional laws requiring them to present balanced budgets by mid-2012, and the introduction of taxes on financial transactions.

"The proposals made today by President Sarkozy and Chancellor Merkel are a welcome step forward in our common efforts to strengthen the governance of the euro area. They represent an important political contribution by the leaders of the two largest euro area economies to this debate and the on-going work," Barroso and Rehn said in their statement.

"The challenges we are facing have made even clearer that a shared currency implies shared responsibility and demands closer coordination of economic policies. A regular format and frequency for the euro area summits, with a permanent chair, contributes to a more stable and stronger political leadership," they added.

The representatives of the European Commission also said that the call to enshrine the principle of a debt brake in national constitutional law was a further strong political commitment to the long-term sustainability of public finances.

"Finally, a financial transaction tax will be a key instrument to ensure that the financial sector makes a fairer contribution to public accounts. The Commission intends to make a proposal in this sense soon, as previously announced. We look forward to working with the president of the European Council and the president of the Eurogroup to take forward this debate and to formulate proposals in the coming weeks," Barroso and Rehn concluded.

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