Merkel and Sarkoz vow fast action as crisis bites

BERLIN

France’s President Nicolas Sarkozy (L) and German Chancellor Angela Merkel walk near the sea in Deauville in this October photo. REUTERS photo

The leaders of France and Germany vowed yesterday to speed up various measures to ease the eurozone crisis, as the euro flirted with new lows on the market amid signs of heightened banking tensions.

French President Nicolas Sarkozy said after talks with Chancellor Angela Merkel that an agreement on stricter budgetary rules tying in all EU members except Britain should be signed by March 1.
Merkel said negotiations on a text were progressing well and also announced Paris and Berlin were ready to accelerate payments into a permanent fund for future possible bailouts.

“Germany and France are ready to review... to what extent our payments can be accelerated in a certain way and thus once again make our trust in and support for the eurozone clearly visible,” she told reporters.

Euro loses big

EU leaders are looking into ways of arming the fund, the European Stability Mechanism, with its resources in one go, rather than putting in smaller trenches over several years under the current plan.
The meeting between the two, who have been at the forefront of efforts to combat the eurozone debt turmoil, came as the euro tested near 16-month lows against the dollar.

“The situation is tense, very tense,” acknowledged Sarkozy.

The crisis also appeared to be returning with a vengeance to Athens, where it began. A team of international auditors was due to return to Greece next week to assess the country’s economy after Prime Minister Lucas Papademos warned of an “uncontrolled default” in March if no further aid was forthcoming.

Merkel called for the “rapid implementation” of reform measures in Greece, warning that new bailout funds could not be paid out otherwise.

Amid renewed speculation that Greece could be forced out of the euro, she nevertheless stressed: “It is our intention that no country should leave the eurozone.”
Analysts were largely unimpressed by the meeting.