PARIS (MNI) – Germany’s Chancellor Angela Merkel and France’s
President Nicolas Sarkozy on Friday vowed jointly to do whatever is
needed to defend the euro, but they made clear that there is virtually
no chance for approval of a recently floated proposal to issue joint
Eurozone bonds.

They also, especially Merkel, poured cold water on the idea of
injecting additional resources into the E440 billion European Financial
Stability Fund. Merkel said it was not a question under serious
consideration.

In a press conference following a Franco-German summit in Freiburg,
Germany, both leaders stressed instead the need for greater convergence
and harmonization of fiscal and economic policies rather than dramatic
new measures.

Merkel vowed that Germany will “actively support” France’s
presidency of the G20 next year. High on the agenda of that presidency,
Sarkozy said, will be reforming the international monetary system.

“We are deeply attached to the euro and will do whatever is needed
to defend it,” Sarkozy said. “The euro is Europe, and Europe is our
future.” Merkel later echoed that sentiment, saying that “Germany, along
with the others, will do all that’s necessary to defend the euro.”

However, Merkel stressed the German line that the Eurobond idea did
not bring anything “useful” to the table. Sarkozy complained that “we
were not consulted before the Eurobond idea was floated” last weekend by
Eurogroup President Jean-Claude Juncker and Italian Finance Minister
Giulio Tremonti.

“The French position is the same as the German one,” Sarkozy said.
Like Merkel, he stressed that more integration was the solution to the
current crisis. But he did say that it might be possible to revisit the
idea of a Eurobond at some point in the future, once Europe has moved
further along the road of economic integration: “You must not put the
cart before the horse.”

Both leaders dodged a question on whether they supported Bundesbank
President Axel Weber to be the next president of the ECB. “We did not
talk about the problem of the ECB today,” Sarkozy said. “But we will
talk about it when the time is right.”

–Paris Newsroom, +331-42-71-55-40; bwolfson@marketnews.com

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