Sunday

4th Dec 2022

Merkel: eurozone crisis will take 'years' to solve

  • Chancellor Merkel - refuses to be rushed into solutions (Photo: The Council of the European Union)

German Chancellor Angela Merkel has dismissed talk that next week's summit will bring about a definitive solution to the eurozone crisis, saying it will take years to overcome the single currency's problems.

Assuming her now familiar role of dampener-in-chief of expectations, Merkel said "there are no simple or quick solutions nor is there the alleged final shot that some talk about before each summit. That is not how I speak or think [about the issue]."

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Getting on top of the sovereign debt crisis will "take years" said the chancellor, with the ultimate goal being "fiscal union" whose members would be bound by enforceable laws on budget discipline and which would contain an "effective instrument for crisis cases."

She said there is "no getting around" a change to the European treaties or establishing new treaties among eurozone members, a step she deemed the "second best" option.

Merkel's refusal to be rushed into solutions comes after several commentators suggested that next week's meeting of EU leaders is the last chance for politicians to get ahead of the crisis, which recently started to affect Germany, the EU's economic motor, as well as peripheral states.

With markets remaining unconvinced by EU politicians' attempts to patch up the eurozone's faulty construction, the European Central Bank, with its theoretically unlimited resources, is increasingly being mentioned as the 'bazooka' option that could end the crisis.

In November, Merkel along with her counterparts from France and Italy made a pact not to make any public demands of the bank.

This was widely seen as paving the way for the bank to make an announcement itself, without appearing to have done so under political pressure.

ECB chief Mario Draghi on Thursday indicated that his institution would play a bigger role if EU leaders agree to greater budgetary discipline.

Meanwhile, French President Nicolas Sarkozy later on the same day made a pointed reference to the bank and its willingness to help during a keynote speech in the southern city of Toulon.

"I am convinced that, faced with the deflationary risk that threatens Europe, the ECB will act. It’s for the bank to decide when and with what means. That’s its responsibility," he said.

"But let me share a conviction with you: let no one doubt that it will take up its responsibility. Indeed, I welcome that it has begun to do so."

Merkel, for her part, on Friday said she would not comment on ECB decisions or make any suggestions about what the eurozone should do.

Merkel's party calls for eurozone exit clause

With Germany pushing for a change to the EU treaty in order to toughen up economic governance, an EU resolution agreed Monday by Chancellor Angela Merkel's CDU party gives an idea of Berlin's thinking on the matter.

Agenda

This WEEK in the European Union

With lending between banks freezing up, contagion spreading to Germany, and EU economy chief Rehn fretting the euro has days to prevent collapse - the coming week is the mother of all crunch weeks for the European Union.

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