Merkel Pushes for New Euro Fiscal Union with 'Strong Germany'

German Chancellor Angela Merkel kicks off a crunch week of talks on saving the euro by laying out a vision for a "fiscal union" in Europe, ahead of a pivotal summit of EU leaders. EPA/BGNES

German Chancellor Angela Merkel called Friday for a new fiscal union among the nations that use the euro, with tougher European Union discipline over free-spending governments.

“Politics has failed over many years,“ she said in an attack on deficit spending, adding that the solution was a fiscal and stability union where excessive deficits were banned in the 17 nations using the euro.

She denied the newly proposed euro fiscal union was a “German plan to dominate Europe“, as cited by DPA.

Merkel stressed in a statement of government policy to the Bundestag in Berlin that there was no quick fix of the euro zone debt crisis, saying it would take a long time to repair the euro zone's flaws.

She called for the European Court of Justice to be given power to punish breaches of the new eurozone stability rules, saying the judges would be “independent of political influence.“

Merkel's speech matched many points of policy outlined late Thursday by President Nicolas Sarkozy of France, DPA adds, stressing that the two leaders want to beat the euro debt crisis by changing eurozone rules and are set to hammer out details at a meeting in Paris on Monday.

The reformed monetary union, aimed at overcoming the weaknesses that have brought on the debt crisis, is to include a legal 'brake' on deficits and disciplinary powers against overspenders.

The chancellor said she wanted a program to restore confidence to markets in place “by the end of this year.“

Merkel said in parliament that Germany was not seeking to impose joint euro zone management of national revenues and spending.

“Budget sovereignty will remain, but within the framework we have adopted for ourselves, the Stability and Growth Pact,“ she said, referring to the 1997 treaty of the 27 EU members that limits deficit spending.

The “clear vision“ of a fiscal and stability union had nothing to do with Germany dominating Europe. “That is absurd,“ she said.

She said her objective at the European summit at the end of next week would be treaty changes applying to the 27-nation EU as a whole.

Creating new treaties within the 17-nation eurozone would only be 'the second best solution,' she said.

“We are going forward with the objective of achieving treaty changes, and in the spirit that we want to avoid a division between euro states and non-euro member states,“ she told deputies.

Merkel said non-euro zone nations such as Poland would be welcome to voluntarily submit to the stricter rules applying in the eurozone.

Rejecting criticism that her response to the euro debt crisis had been dilatory, Merkel likened her government's approach to that of a marathon runner.

“The winner is the one who knows what they need to pay attention to over the whole distance,“ she said.

Later, meeting with visiting Austrian Chancellor Werner Faymann, Merkel said:

“We will be speaking next week about how we can win back credibility, because the situation on the markets now is ... that confidence in European bonds has been shaken.“

Merkel said Germany's 1990 reunification and the union of Europe “are two sides of the same coin.“

She said her motto was: “A strong Germany in a strong EU for the best of the people of Germany and the people of Europe.“

At her news conference with Faymann, Merkel ruled out, for the time being, more extensive changes because those could trigger a referendum in Germany on transferring partial sovereignty to the European Union.

“This is not the subject of the current discussions,“ she added.

The European Commission in Brussels welcomed the speech as a “very important“ one that set out many “fields of action.“

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