Germany, France to present joint euro reform proposals

Tue Jan 22, 2013 8:51am EST
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By Andreas Rinke and Emmanuel Jarry

BERLIN (Reuters) - The leaders of Germany and France promised to put forward common proposals to deepen Europe's economic and monetary union by May, as they put on a show of unity on the 50th anniversary of the pact that sealed their post-war reconciliation.

Angela Merkel, a conservative, and Francois Hollande, a socialist, have had an uneasy relationship since the French president swept into office eight months ago vowing to reverse German-backed austerity policies aimed at shoring up the euro.

But the two leaders, born less than a month apart in the summer of 1954, rejected the suggestion that ties between Berlin and Paris were difficult, highlighting the steps they have taken together to shore up the single currency bloc.

"It may be our best-kept secret that the chemistry actually works," said Merkel, who refused to meet with Hollande during last year's French election campaign while openly supporting his conservative opponent Nicolas Sarkozy.

Hollande pointed to the fiscal compact on budget discipline, a December deal on banking supervision and the agreement to keep Greece in the euro zone as fruits of the strong relationship between him and Merkel.

"It has not escaped you that we do not belong to the same political family. Despite that, if you look back at the past eight months, I'm very happy with what France and Germany have been able to accomplish to get the euro zone out of its crisis," he said. "If you look at the results, it's clear we're on the same wavelength."

On one of the most divisive issues between the two countries -- deeper economic and fiscal integration -- the two promised to come up with joint proposals before a summit of EU leaders scheduled for June.

Berlin and Paris have a different vision of a closer union, with Merkel favoring tighter central controls over budgets and Hollande seeking more solidarity and risk-sharing, in the form of a big euro zone budget to deal with economic shocks.   Continued...

German Chancellor Angela Merkel (L) and French President Francois Hollande leave a family picture opportunity at the chancellery in Berlin during a day of celebrations marking the 50th Anniversary of the Elysee Treaty, January 22, 2013. REUTERS/Thomas Peter