Eurozone giants Germany and France vowed to propose changes to EU governing treaties yesterday, but Chancellor Angela Merkel stood by her refusal to widen the European Central Bank’s role.
France had urged Berlin to allow the ECB to become a lender of last resort, with the firepower to protect debt-ridden eurozone members from falling victim to the bond markets, but the German leader stood firm at crisis talks.
President Nicolas Sarkozy of France and Prime Minister Mario Monti of Italy stood by her side at a news conference in Strasbourg as she repeated her line, which observers and traders have warned could threaten eurozone survival.
“The French President has just underlined that the European Central Bank is independent,” Mrs Merkel told reporters in the eastern French city.
“So the eventual modifications to the treaties will not concern the duties of the ECB, which concern monetary policy and monetary stability,” she added.
With a tight smile, Mr Sarkozy agreed that: “All three of us said that with respect for the independence of this institution, one should refrain from positive or negative demands of the ECB.”
Earlier, however, Mr Sarkozy’s senior ministers had made it clear that Paris was pushing for a change in the ECB’s role, which Berlin insists must remain limited to controlling inflation and not bailing-out insolvent states.
“It is urgent,” Foreign Minister Alain Juppe said. “The situation is serious. We must not underestimate its gravity.”
France’s Minister for European Affairs, Jean Leonetti, explained: “France eventually wants the European Central Bank to have the same role as the Federal Reserve in the United States. What’s going on is very abnormal.
“Why is the euro under attack? It’s simple. In the United States there’s a Federal Reserve. Europe has the European Central Bank, but the European Central Bank does not buy up sovereign debt if needed,” he argued.
Germany, while holding out firmly against such an expansion of the ECB’s role, is calling for changes to European treaties to enforce greater budget discipline on its heavily indebted partners.
Mr Sarkozy said that he and Ms Merkel would work on a package of reforms in coming days, and present it to the Union as a whole at a December 9 summit.
Some EU allies warn that treaty changes will take too long and might prove politically impossible to enact if hard-pressed voters suffering austerity programmes or eurosceptic governments like Britain’s reject them.