June 7 (Bloomberg) -- Chancellor Angela Merkel said that Germany is ready to back the use of all existing euro-area instruments to help stabilize the 17-nation euro region.
With the financial crisis raging, the German government is willing to deploy the tools at hand whenever needed to bolster the euro region, she told reporters today at a joint press conference with British Prime Minister David Cameron.
“In view of the current difficulties, it’s important to emphasize that we have created the instruments of support in the euro zone, that Germany is ready to work with these instruments whenever that is necessary and that this is an expression of our firm desire to keep the euro area stable,” the chancellor said. Merkel didn’t outline to which tools she was referring.
With Spain struggling to avoid a bailout and Greece at risk of exiting the euro, Cameron and President Barack Obama called on Europe’s leaders yesterday for an “immediate” plan to resolve the crisis. Merkel has stepped up her opposition to debt sharing in the euro region and rejects proposals that Spain’s banks be allowed direct access to the euro bailout funds.
Speaking earlier, Merkel said that she supports a two-speed European Union, with a core group in the euro pressing ahead with deeper integration and the U.K. among others relegated to Europe’s margins. Her comments, made in an interview with ARD television today, underscore her differences with Cameron as he presses for more aggressive action by euro countries to counter the financial crisis.
“Those in a monetary union will have to move closer together,” Merkel said on ARD. “We have to be open. We always have to make it possible for everyone” to join. “But we must not stop because one or the other doesn’t want to come along just yet.”
Europe is already moving at different speeds, Merkel said, citing the Schengen agreement that abolished border controls between some European countries and the monetary union that excludes the U.K. and Denmark.
“This will be intensified,” she said. “We need more Europe, we need not only a monetary union, but we also need a so-called fiscal union, in other words more joint budget policy. And we need most of all a political union, that means we need to gradually give competencies to Europe and give Europe control.”
Ceding more control to Brussels is anathema to many lawmakers in Cameron’s Conservative Party, more than a quarter of whom defied the government in October and voted in favor of a referendum on continuing British membership of the EU.
“All countries across Europe can help by offering the right advice and the right steps forward to the euro-zone countries,” Cameron said in Oslo today before leaving for Berlin. “Clearly the first priority is to stabilize the financial situation. That means recapitalization of banks, it means building of firewalls, it means reassuring markets.”
EU President Herman van Rompuy is drafting proposals on a “fiscal union” that will be discussed by European leaders at a Brussels summit on June 28-29. Merkel said leaders will consider a plan to transform the EU into a political union. Still, a breakthrough can’t be achieved at just one summit, she said.
Speaking with Cameron, the chancellor reiterated the need to push for deeper cooperation in Europe to staunch the crisis, saying that “we have common interests for all of Europe.”
“We want solid budgets and we want growth,” she said. “We believe that the difficulties we have in Europe have to be solved in a spirit that comprises all of Europe, because growth and prosperity for all of us depends on it.”
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