STRASBOURG, France (MNI) – French President Nicolas Sarkozy and
German Chancellor Angela Merkel said Thursday that they would seek
changes in EU treaties to foster a fiscal union in the Eurozone but that
this would not affect the European Central Bank.

Following a meeting here with the new Italian Prime Minister Mario
Monti, Sarkozy and Merkel conceded that they remained at odds over the
proper role of the ECB in fighting the debt crisis, but said would press
forward with plans for a tighter economic governance in the Eurozone.

“We don’t have the same history regarding European institutions
like the ECB,” Sarkozy said, adding that France had agreed to stop
making demands that the central bank play a more active role.

European leaders will meet in Brussels on December 9 to try again
to come up with a plan to confront the crisis, which has spread from
peripheral countries to the Eurozone core. Treaty changes that could
force Eurozone states to give up some sovereignty over budget matters
are expected to be at the heart of the plan.

Merkel reiterated that she opposed the issuance of eurobonds, or
so-called stability bonds, saying they could be contemplated only after
Europe achieved greater fiscal convergence.

“My position on that has not changed,” Merkel said. “The conditions
for that are not met.”

The chancellor argued that it would be wrong to force all yields on
bonds issued by Eurozone member states to one level because the spreads
currently reflect the differences in competitiveness among the states.

Instead of introducing common bonds, spreads need to be narrowed
down by winning back confidence and making reforms, Merkel insisted.

“If we all work reasonably then the convergence process will come
on its own,” she said. “However, to force [a narrowing of spreads] will
weaken us all, that is my opinion.”

Commenting on the role of the ECB in the crisis, Merkel stressed
that “the ECB is independent and that is why possible treaty changes
will not concern the ECB.”

The ECB “is responsible for monetary policy and the stability of
the currency,” she underlined.

— Paris bureau: +331 4271 5540; jduffy@marketnews.com

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