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In their efforts to overcome the crisis, the euro-zone states have already made a great deal of progress, explained the Chancellor. The EU is in agreement on the causes of the crisis and a consensus has been reached on tackling it. The euro-zone states have already taken concrete steps towards establishing a fiscal union, she said. "We are now beginning to put in place the fiscal union." The need for this has been widely recognised.

  

Protecting credibility

 

"People trust the courts, the national central banks and the European Central Bank (ECB). The credibility of these institutions must be protected," declared the Chancellor. To this end, their independence must be guaranteed.

 

Regaining confidence

 

"One field which has regrettably almost entirely lost the confidence of the people, over a period of many, many years, is politics," added Angela Merkel. Politicians have failed to meet all or some of the provisions of the Stability and Growth Pact. Now agreement has been reached that this must stop. The details must still be hammered out, but a consensus exists on the project as a whole. The euro-zone states must find ways to put into practice what has been decided and to put in place a strong fiscal union, she said.

 

Seeing the crisis as a opportunity

 

Now we have the opportunity to tackle fundamental structural defects in the economic and currency union, stressed the Chancellor. To this end it is essential that all states comply with the provisions of the Stability and Growth Pact. Any failure to do so must have repercussions. The EU institutions must play an important part in this. "A distinction must be made between credible rights of intervention and national budget rights." This should not entail any joint liability. National revenue and expenditure will not be controlled by any one EU institution.

 

No eurobonds

 

Once again the Chancellor roundly rejected the notion of eurobonds. Any joint liability for the debts of other euro-zone states is unthinkable, she said.

 

Using available instruments

 

"The authority of the EU must be strengthened such that the agreed ceilings (on budget deficits and national debt) can be effectively enforced. This must include the right to take offenders to the European Court." Structural reforms are also needed to boost growth and create jobs. These cannot be financed on credit, though, added the Chancellor.

 

Fiscal union

 

The foundations of the economic and currency union must be strengthened on a long-term basis and structural defects remedied. That would be the fiscal union. This will entail modifying the European treaties. Any split in the EU must be avoided. Non-euro-zone states should also be able to join. There can be no question of Germany wanting to dominate Europe. "German and European unification are two sides of the same coin," said Angela Merkel.

 

 

The "fiscal union" will mean primarily closer financial-policy cooperation among euro-zone states with a view to overcoming the euro crisis. The modifications needed to the European treaties are a first step on the way to a fiscal union.

 

Euro has proved its value

 

The euro has retained its value better than the D-Mark and is more than just a currency. It is a symbol of the will of Europe to meet the demands of a globalised world. As the Chancellor put it, "Our aim is to see a strong Germany in a strong EU so that the people in Germany can prosper."