France and Germany want a new EU treaty by March with tougher budgetary rules to deal with the eurozone debt crisis, President Nicolas Sarkozy and Chancellor Angela Merkel said Monday.
The two leaders made the announcement after crunch talks in Paris at the start of a crucial week for the euro, teetering on the brink because of its indebted member states, ahead of a key EU summit in Brussels on Thursday.
“The goal that we have with the chancellor is for an agreement to have been negotiated and concluded between the 17 members of the eurozone in March, because we must move quickly,” Sarkozy said, warning of a “forced march to reestablish confidence in the euro and the eurozone”.
Sarkozy said the new treaty would be either for all 27 EU members or for the 17 members of the eurozone, with other nations signing on a voluntary basis.
The Franco-German proposal is to be detailed in a letter to EU president Herman Van Rompuy on Wednesday, the day before the EU summit convenes in Brussels.
The two leaders backed automatic sanctions against EU member states whose deficits go over three percent of gross domestic product.
They also called for a “reinforced and harmonised golden rule” on deficits, which could oblige some states to enshrine the commitment to balance their public finances in their constitution or legislation.
The European Court of Justice should be tasked with verifying that national budgets obey deficit rules, but it should not be able to declare budgets “null and void”, Merkel said.
With debt contagion threatening to spread throughout the eurozone, Italy kicked off a critical week by presenting a draconian package of cuts, taxes and pension reforms to parliament as Europe tries to pick up the pace to keep the euro alive.
Prime Minister Mario Monti warned that Italy risks a Greek-style “collapse” if it is not adopted, as financial markets cheered the proposals.
Italy, the eurozone’s third-biggest economy, is desperate to prove to its European neighbours that it should be part of the discussions on saving the eurozone — rather than being seen as one of its biggest problems.
Ireland’s Prime Minister Enda Kenny also Monday announced a 3.8 billion euro austerity budget, a day after warning citizens to brace for years of economic hardship during a historic television address.
The call in Paris for tighter discipline and the austerity measures in Rome saw Italy’s long-term borrowing rate fall below the key 6.0 percent threshold for the the first time since the end of October.
Experts consider borrowing rates above 6.0 percent to be unsustainable in the long term for countries with slow growth and low inflation.
Rates also dropped on Spanish and French bonds throughout the day, although they rose for Ireland.
London, Paris and Frankfurt stock markets all closed up after the Sarkozy-Merkel encounter, with Milan’s jumping 2.91 percent.
It was hoped that Monday’s proposals would be seen as a credible guarantee that eurozone governments will at last bring their deficits under control and satisfy restive markets.
European Central Bank chief Mario Draghi has said he could then take action, and many hope the bank will intervene to protect European banks from a credit crunch and buy bonds to rein in soaring rates on government borrowing.
However, Sarkozy said that Germany and France were “in complete agreement to say that eurobonds are in no case a solution to the crisis, in no case.”
“How can we convince others to make the efforts we are making ourselves if we pool our debts as of now? None of this makes any sense.”
Sony Kapoor of the Re-Define think tank warned: “It is far from obvious that the ‘stability union’ envisaged in the Franco-German discussions addresses the main structural and governance failings of the eurozone.”
“After two years of the euro crisis they have reached an agreement to reach an agreement a few months down the line and sign it into force over the next few years.”
Sarkozy called for European summits to be held every month while the euro crisis raged, and for the meetings to have “precise agendas” with markets having in the past accused eurozone leaders of dithering.
Amid concern that the eurozone crisis will trigger a global economic downturn, US Treasury Secretary Timothy Geithner has also been dispatched to Europe, where he arrives on Tuesday to pressure leaders to take effective action.
Suspect swallows poison after verdict in French murder case
The suspect for the rape and murder of a young woman in northern France almost two decades ago was under guard in hospital Saturday after he swallowed pesticide in an apparent suicide bid following his conviction.
Willy Bardon, on trial over the murder of Elodie Kulik in 2002 in a case that has attracted strong interest in France for years, ingested the substance at the courthouse in the northern city of Amiens late on Friday.
Bardon had been sentenced to 30 years jail for kidnapping and holding a person against their will followed by death. He was however acquitted of murder.
Fossil fuel groups ‘destroying’ climate talks: NGOs
Oil and gas groups were accused Saturday of seeking to influence climate talks in Madrid by paying millions in sponsorship and sending dozens of lobbyists to delay what scientists say is a necessary and rapid cut in fossil fuel use.
A day after tens of thousands marched in the Spanish capital demanding climate action, seven environmental groups raised concerns to AFP over the role of fossil fuel representatives at the COP25 summit.
Under the 2015 Paris Agreement, nations agreed to limit global warming to "well below" two degrees Celsius (3.6 degrees Fahrenheit) and as close to 1.5C as possible.
Elon Musk cleared of defamation over ‘pedo guy’ tweet
Tesla co-founder Elon Musk was cleared of defamation on Friday by a jury in Los Angeles over a tweet in which he labeled a British caver "pedo guy."
The jury deliberated less than an hour before ruling in favor of Musk and clearing him of any liability in the high-profile case that pitted him against Vernon Unsworth.
Unsworth had sought $190 million in damages from the tech billionaire, arguing that his reputation had been damaged by the tweet.
Musk hugged his lawyer on hearing the verdict, telling reporters afterwards: "My faith in humanity has been restored."