DEBT CRISIS:US TREASURY secretary Timothy Geithner gave his backing to the Franco-German plans for an overhaul of the EU treaty as Washington kept up the pressure on Europe to bring the debt crisis under control.
Mr Geithner, on a tour of European capitals to lobby for decisive action this week, said he had “a lot of confidence” in French and German moves to “build a stronger Europe”.
In Paris for meetings with President Nicolas Sarkozy and finance minister François Baroin ahead of this evening’s crucial EU summit in Brussels, Mr Geithner said he had “underlined how important it is for the United States and the rest of the world that Europe succeeds”.
Amid intense diplomatic activity in the build-up to the Brussels summit, Taoiseach Enda Kenny will today join Mr Sarkozy, German chancellor Angela Merkel and other conservative leaders for a working lunch at the European People’s Party congress in Marseille.
The Marseille meeting is being dominated by the sovereign debt crisis. Mr Geithner travelled to the southern French city yesterday to meet new Spanish prime minister Mariano Rajoy, while French prime minister François Fillon warned in an address to delegates that EU states were in an “unprecedented storm” and had a “collective duty to succeed” at the Brussels summit.
“If we don’t succeed, we will feed the accusation of impotence and indecision, which is driving the current crisis,” Mr Fillon said.
In a joint letter to European Council president Herman Van Rompuy yesterday, Mr Sarkozy and Dr Merkel outlined their detailed proposals on treaty changes that would impose mandatory penalties on euro zone states that exceeded deficit limits.
The letter proposes a new EU framework to speed up progress towards a “harmonised” corporate tax base and a financial transaction tax. However, the idea of a common corporate tax rate, which Mr Sarkozy raised in a speech in Toulon last week but is strongly opposed by Ireland, is not included in the letter.
“France and Germany have taken the initiative . . . but we need the support of everyone,” Mr Fillon said.
Mr Van Rompuy has said tighter budget oversight sought by Paris and Berlin for the euro area could be achieved quickly with only minor tweaks to the EU treaty, a scenario that might not require a referendum in Ireland.
In contrast to the pessimistic tone emerging from Berlin yesterday, Mr Baroin signalled French confidence that a deal could be struck when EU leaders meet in Brussels.
“Neither Nicolas Sarkozy nor Angela Merkel will leave the negotiating table of this summit until there is a powerful deal,” he said.
During visits this week to Berlin and Frankfurt, where he met European Central Bank governor Mario Draghi, Mr Geithner stressed that the ECB and the IMF had a central role to play in resolving the euro zone crisis.
Alarmed that Europe’s problems were weighing heavily on the US economy, he encouraged euro zone governments to erect “a stronger firewall” to protect troubled economies and welcomed “progress towards a fiscal compact for the euro zone”.
Mr Draghi has signalled that a deal on such a “fiscal compact” could encourage the ECB to act more decisively.