UPDATE 2 - German Chancellor Angela Merkel discussed the financial situation in the EU as well as bilateral issues such as migration and the European power grid in talks with the Prime Minister at the Auberge de Castille this afternoon.
She arrived in Malta at 4 p.m. and was accorded a ceremonial welcome at Castille Place, where she was greeted by Dr Gonzi. She inspected an AFM Guard of Honour before entering Castille for talks lasting just under an hour.
At a press conference Dr Gonzi said they had discussed issues of common interest. Malta, he said, appreciated German collaboration in trade, business, jobs and investment.
He said they had discussed economic and financial governance and efforts at EU levels for member states to achieve growth and stick to their commitments, especially in the eurozone, to avoid a repetition of what happened in past months.
Malta, Dr Gonzi said, was committed to the economic governance rules.
On Immigration, Dr Gonzi thanked the Chancellor for understanding Malta's problems, which, he stressed, were Europe's problems too, and he thanked Germany for its support - Germany recently took some migrants from Malta.
Asked by a German journalist for his views on Libyan leader Gaddafi's declaration that he wanted substantial funds from the EU in order to help in the immigration problem, Dr Gonzi said immigration was the end result of poverty and economic stability in Africa. Libya was a transit country. The EU, therefore had to sit down and talk with Libya, as was being done within the framework agreement. The fact that there had been a decline in the number of migrants showed that there was a means to control the migrant flow.
"But paying a large amount of money to someone is not something which will solve the problem."
Mrs Merkel said Malta and Germany had been working very well together in the EU and bilaterally. She mentioned as an example the Lufthansa Tecknik in Malta and how Malta was serving as a financial centre for several German companies.
Malta, like Germany had weathered the financial crisis well, she said, and the EU now had to see how it could achieve long term growth so that it could show itself to be a stable region.
She said that Malta had specific interests being an island. She mentioned that on February 4 EU leaders would discuss an EU electricity grid to prevent countries such as Malta from being cut off from the rest of Europe.
On migration, she said the issue had to be addressed at the roots, although she acknowledged that this could be a tricky and complex issue.
On the financial situation, Mrs Merkel said Europe had shown solidarity with Greece and Ireland but never pressured any country to take certain steps. Portugal had been offered the facility but it was now up to that country to ask for that solidarity.
Mrs Merkel this evening also met President George Abela and Opposition leader Joseph Muscat.
The Labour Party said the meeting with Dr Muscat focused on the financial situation in Europe and the state of the euro.
Mrs Merkel leaves Malta for Cyprus early tomorrow morning.