Europe Debt Crisis: France And Germany To Propose Changing EU Treaties

Posted: Updated:

STRASBOURG, France (AP) -- President Nicolas Sarkozy appeared to temper his calls for the European Central Bank to play a bigger role in solving Europe's debt crisis as he agreed to a German effort to change EU treaties to improve the governance of the troubled eurozone.

Speaking after meeting with German Chancellor Angela Merkel and Italian Premier Mario Monti on Thursday, Sarkozy said "propositions for the modification of treaties" would be presented in the coming days.

He wouldn't elaborate on what these changes may be but said they would be ready in time for the next EU leaders summit on December 9.

This was the first meeting of the three leaders since Monti took over last week following mounting market concerns over Italy's huge debts.

The meeting in Strasbourg, France comes amid signs that even Germany and France — the eurozone's two biggest economies — are not immune from the crisis that's already seen three relatively small countries bailed out.

All three leaders said they would do what it takes to stabilize the situation and save the euro.

"We want the euro, we want a strong, stable euro ... we will do everything to defend it," Merkel said.

France has been reluctant to resort to changes to EU treaties to improve the way the eurozone countries work together and set policies and prevent future crises. Germany had pushed for such changes, saying voluntary pledges by national governments are no longer enough to boost market confidence.

Merkel insisted that the proposed changes would "not deal with the European Central Bank," which she stressed was responsible for monetary, not fiscal, policy. Sarkozy did not push for a greater role at their closing press conference, while Merkel insisted on the bank's independence.

Many think the ECB is the only institution capable of calming frayed market nerves.

Potentially, the ECB has unlimited financial firepower through its ability to print money. However, Germany finds the idea of monetizing debts unappealing.

Monti, meanwhile, reiterated his pledge to balance Italy's budget by 2013 though he sidestepped the question on whether achieving that aim would require more austerity measures, and if so, whether it risked triggering a recession in the eurozone's third largest economy.

By GREG KELLER, AP Business Writer

Around the Web

European sovereign debt crisis - Wikipedia, the free encyclopedia

Europe's Debt Crisis

Germany's auction flop adds to European debt fears

Stocks slump as Europe's debt crisis appears to spread; Dow average sheds 236 ...

What the European debt crisis means for you

German Swaps Signal No-Win in Euro Debt Crisis: Credit Markets