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Strategy to overcome the national debt crisis
They will be sending their proposals to Herman Van Rompuy, President of the Council of the European Union They will be asking Herman Van Rompuy to put the proposals on the agenda for the European Council summit meeting on 8 and 9 December in Brussels.
The proposals are as follows:
1. Automatic sanctions
Should a state fail to comply with the budget deficit regulations sanctions should automatically be imposed; these could only be prevented by a two-thirds majority.
2. Golden rule for a balanced budget
In all 27 EU states, but at least in the 17 euro-zone states there are to be compulsory, standard ceilings on permissible debt levels. The European Court should be able to determine whether or not the national legislation in member states guarantees the binding nature of compliance with the permissible debt ceiling. It should not be able to declare individual national budgets invalid.
Chancellor Angela Merkel says, "If that proves impossible for all 27 EU member states, Germany and France are determined to take this path with the 17 euro-zone states."
3. Responsibility of the private sector
The EU aims to involve private creditors in line with the rules of the International Monetary Fund (IMF). Greece is a one-off case, which must not be allowed to happen again. It must be clear that government bonds are a safe investment, explained Angela Merkel.
4. European Stability Mechanism
Germany and France want to accelerate the adoption of the European Stability Mechanism so that it is in place by the end of 2012.
5. Monthly meeting of economic governance representatives
The heads of state and government of the euro-zone states should meet once a month as an economic governance body. The meetings would aim to boost competitiveness and economic growth.
6. European Central Bank (ECB) and eurobonds
Germany and France have full confidence in the ECB and reaffirm its independence. There will be no eurobonds. "Joint liability for debts makes no sense," declared Nicolas Sarkozy.
Negotiations on modifications to the European treaties should be wound up by March 2012.
Extremely close cooperation
Angela Merkel and Nicolas Sarkozy underscored the vital importance of Franco-German cooperation. The two largest economies in the European Union have had to make good the mistakes of the past during the crisis.
The joint initiative is to send a signal to investors around the globe – Europe will respect the rules as regards debt levels, will pay its debts, and will boost growth.
