Published: Wed, June 06, 2018
Economy | By Melissa Porter

France welcomes Merkel's comments on European Union reforms

France welcomes Merkel's comments on European Union reforms

France's presidential Elysée Palace hailed Merkel's remarks in an interview with the Frankfurter Allgemeinen Sonntagszeitung (FAS) weekly newspaper as a move "toward the French view" on ways to strengthen the eurozone and European Union.

Markets will persuade Italians not to vote for the two populist parties that have tried and failed to form a government this month, the anti-establishment 5-Star Movement (M5S) and the anti-migrant Eurosceptic League, the EU's budget Commissioner said in an interview with Deutsche Welle. Macron wants a future EMF to act as a buffer in any future financial crises in the bloc, which was almost torn apart in a debt crisis in 2009. Britain has already backed the planned force, which will operate independently of the European Union, despite misgivings that it could be seen as a "European army".

For Guntram Wolff, director of the Bruegel think-tank, Merkel's comments represented a "softening" of Germany's position on the debt issue.

Merkel insisted that a future "EMF" must continue providing long-term loans (30 years), as long as member states passed "far reaching structural" reforms.

She proposed offering short-term credit lines to stricken countries, but maintained strict conditions for support: "always subject to special conditions of course, for a limited amount and with complete repayment". "As such, we would be able to take under our wing countries that get into difficulties because of extraordinary circumstances". Scholz is a member of the Social Democrats, junior partner in Merkel's coalition. "This is very pleasing", SPD leader Andrea Nahles told the ARD public broadcaster.

The comments suggest a new willingness by Ms. Merkel to engage with Mr. Macron's proposals, despite signs this year that the chancellor would cede to domestic pressure to keep any eurozone overhauls to a minimum.

Merkel also said that a future EMF would be organized on an intergovernmental basis and national parliaments of member countries would have oversight. Lawmakers from Merkel's conservative bloc have been cold to Macron's proposal, saying they are wary that his call for more solidarity could see German taxpayers' money used to fund profligate member states.

It added that there was also a convergence regarding reform of the currency union.

German Chancellor Angela Merkel advocated the creation of a European rapid reaction force, thus supporting the initiative of French President Emmanuele Makron.

She has faced mounting criticism in recent weeks for failing to engage with Macron, who campaigned on a pledge to reform Europe and has sketched out his ambitious vision in a series of speeches over the past year. The introduction of the budget, she said, should happen in several stages based on the assessment of its effectiveness.

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