Merkel Says EU Must Forge Closer Union to Convince Bondholders
German Chancellor Angela Merkel said it’s time to move toward closer political union in Europe to send a message to bondholders that euro-area leaders are serious about ending the sovereign debt crisis.
Speaking on the eve of her Christian Democratic Union party’s annual congress in the eastern German city of Leipzig, Merkel said she wants to preserve the euro with all current 17 members. “But that requires a fundamental change in our whole policy,” she said.
“I believe this is important for those who buy government bonds: that we make it clear that we want more Europe step by step, that is that the European Union, and the euro area in particular, grows together,” Merkel said today in an interview with ZDF television. “Otherwise people won’t believe that we can really get a handle on the problems.”
Merkel will address her party at about 11 a.m. tomorrow after weeks of crisis fighting during which she raised the prospect of ejecting Greece from the euro and joined with French President Nicolas Sarkozy to call on Italy to hold to its budget pledges. After leadership changes in both countries, the chancellor is turning her attention to shaping the EU’s future.
“Big political changes are now sweeping through the euro zone, putting — at least for now — the many skeptical political observers to shame,” said Erik Nielsen, chief global economist at UniCredit SpA in London. “But will the market appreciate it?” he said. “I am not completely sure that it’ll get it quite yet.”