Sue countries that break rules and risk euro –Merkel
GERMAN Chancellor Angela Merkel today called for countries who break the rules governing the single currency and threaten the financial security of the eurozone to be prosecuted in court.
A new ‘stability union’ with stronger fiscal controls and debt regulations was required, she told the German Bundestag.
Rejecting any ‘quick fix’ ideas she said a new Treaty was needed, but a solution would take years. She also again ruled out the controversial option of Eurobonds.
Countries which don’t respect the rules should be brought before the European Court and sanctions should be applied, she said.
French President Nicolas Sarkozy and British Prime Minister David Cameron were meeting to discuss ongoing euro crisis after a new deal to save the euro took a huge step forward last night.
Mr Sarkozy said he would meet Mrs Merkel in Paris on Monday to push ahead with joint proposals for a new EU treaty to create a true economic government for the bloc.
In response, the ECB is expected to make a massive intervention to stabilise the money markets and prevent more countries from having to seek a bailout.
However, Mr Sarkozy raised fears the proposed changes might pose a threat to Ireland's corporation tax. He said "unfair competition" on tax could not continue.
The prospect of wide-ranging Treaty changes would require a referendum to be passed. It is firmly opposed by Taoiseach Enda Kenny.
IBEC director Brendan McGinty said on Morning Ireland that a change to Ireland’s corporation tax was not an option.
The Government was closely monitoring the speech but said it was "restatement of the French position".
The French president said changes would involve more and closer economic control, with more qualified majority voting.
Any changes to the Treaty would be difficult to agree, take several years and would probably require an Irish referendum.
The ECB will not be part of the formal deal -- so as to preserve its independence.
However, in his speech, Mr Sarkozy said: "I am convinced that facing the risk of deflation that threatens Europe, the ECB will act. It's up to it to decide when and in what way."
In what appeared as a coordinated approach, the new president of the ECB, Mario Draghi earlier yesterday hinted at greater action by the bank if governments moved towards a "fiscal compact".
Mr Draghi did not spell out what action the ECB might take, saying only a commitment by political leaders to stricter budget discipline and binding their economies more closely "is definitely the most important element to start restoring credibility. Other elements might follow, but the sequencing matters".
And in a newspaper interview, Mrs Merkel also stressed the importance of ECB independence.
Germany has been opposed to further ECB support but is no expected to soften this position in return for promises of treaty changes.
Ms Merkel will travel to Paris on Monday to outline joint proposals with Mr Sarkozy for the summit on December 9.
A deal is seen as make-or-break for the 12-year-old single currency.
"Europe is no longer a choice. It is a necessity. But the crisis has revealed its weaknesses and its contradictions. Europe must be rethought," Mr Sarkozy said.
"Let us not hide it, Europe may be swept away by the crisis if it doesn't get a grip, if it doesn't change," Mr Sarkozy said. "We don't have the right to let such a disaster happen."
A government spokesman said Mr Sarkozy's suggestions of treaty changes and his utterances on tax policy were not new developments.
"It is a restatement of the French position," a spokesman said.
EU Council President Herman Van Rompuy will bring forward proposals on a tightening up of rules, including possibly Treaty changes.
"At the summit, a paper will be brought and we will engage positively," the spokesman said.
European Affairs Minister Lucinda Creighton said last night that Ireland's corporation tax remained "sacrosanct".