German Chancellor Angela Merkel and French President Nicolas Sarkozy have proposed a new EU treaty to secure the region from an economic crisis relapse. The leaders met in Paris for talks, starting a crucial week for the economics of the eurozone.
Speaking at a press conference after the meeting, Sarkozy said that he and Merkel would prefer all 27 members of the European Union to sign the agreement, but would also be satisfied if it is signed only by the 17 countries belonging to the eurozone.The proposed treaty stipulates automatic sanctions for countries violating rules regarding government deficits in check. Germany and France are also pushing for a monthly summit of eurozone leaders "as long as the crisis lasts." According to Merkel the new measures show that both countries “are determined to keep the euro as a stable currency and as an important contributor to European stability.” She also said that she wants to see "structural changes which go beyond agreements."The talks were held ahead of an EU summit on Friday that many see as decisive for the future of Euro and the eurozone. Sarkozy and Merkel have repeatedly called for tougher measures to preserve the euro and solve the economic crisis in Europe. Last week, Merkel called for “a fiscal union with strict rules” to address the root causes of the crisis. While many analysts see the salvation in joint Eurobonds, both Sarkozy and Merkel reject this strategy. On Monday Sarkozy reiterated that common bonds are not the solution to the crisis.
Patrick Young, executive director of the investment firm DV Advisors, thinks the treaty will be of little – if any – help for the situation with the euro, calling it “another piece of duck tape” put across the currency to hold it together. Commenting on the measures announced the analyst lashed out at Merkel and Sarkozy, accusing them of economic incompetence. “Merkel really does not have the slightest understanding about economics, banking, finance and things like that,” he said. “Neither party has a clue what they are doing.”
Godfrey Bloom, Member of the European Parliament, also blames France and Germany for the current situation with the euro. “The whole euro project was a German horse with a French jockey,” he points out, “nobody else is being mentioned.” Bloom, who is even more categorical about the euro, gives the “doomed to failure” project just months before it collapses, saying people the responsible for it should be “sent to prison.”