Sarkozy pushes for 'two-speed' Europe
With France's borrowing costs on the up and with its prized triple-A rating under threat, French leader Nicolas Sarkozy is publicly advocating a fast-lane Europe for 'core' euro-countries.
"In the end, clearly, there will be two European gears: one gear towards more integration in the euro zone and a gear that is more confederal in the European Union," Sarkozy said Tuesday (8 November) during a discussion with students at Strasbourg University.
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Key to his argument was that as the EU will one day take on the Balkan countries, deeper economic integration at 32, 33 or 34 member states will be "impossible."
Keeping non-euro countries outside the room when it comes to discussions on eurozone troubles has already sparked friction in the EU.
The 'outs' as they are called have been clubbing together to make sure that their views are not completely discounted as eurozone leaders rush through new policies.
The division has also produced sharp friction between Sarkozy and British Prime Minister David Cameron, with the French leader saying that he is "sick of" of Britain telling euro-countries what to do.
And despite Sarkozy's talk about 'core' eurozone integration, markets in the last couple of years have had no problem in rating countries within the euro-area very differently. The French president is keen to avoid the markets focussing too closely on France, as they are currently doing with Italy, sending Rome's borrowing costs soaring.
But there are signs that France is already on the markets' radars. On Wednesday, for the first time, traders flocked to German bonds deemed as "safe haven", while French papers were dumped, pushing up Paris' borrowing costs as Berlin's are inching towards zero.
How to deal with the ever worsening crisis has exposed the panic and the ad hoc decision-making among eurozone leaders.
According to unnamed Brussels-based officials quoted by Reuters, France and Germany have discussed plans for a radical overhaul that would involve setting up a more integrated and potentially smaller euro zone.
"France and Germany have had intense consultations on this issue over the last months, at all levels," the source told Reuters.
Both Berlin and Paris deny that this is the case.
But a speech held by European Commission President Jose Manuel Barroso in Berlin on Wednesday suggests he is taking the threat of such plans seriously.
"Let me be clear - a split union will not work. This is true for a union with different parts engaged in contradictory objectives; a union with an integrated core but a disengaged periphery; a union dominated by an unhealthy balance of power or indeed any kind of directorium," he said.
The EU is based on justice, equality and rule of law, "not on any power or forces," he insisted.
Barroso even went a step forward and suggested that all EU countries should adopt the euro, directly challenging Britain and Denmark, who are the only two EU members who have ruled out ever joining the single currency area.
"No, the euro area is not an 'opt-out' from the European Union. In fact all the European Union should have the euro as its currency. So the challenge is how to further deepen Euro area integration without creating divisions with those that are not yet in it," he said.
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