News / Europe

Markets Unimpressed by France-Germany Euro Plans

French President Nicolas Sarkozy, second from left, and German Chancellor Angela Merkel, second from right, attend a meeting to discuss how to deal with Europe's sovereign debt crisis, at the Elysee Palace, Paris, August 16, 2011
French President Nicolas Sarkozy, second from left, and German Chancellor Angela Merkel, second from right, attend a meeting to discuss how to deal with Europe's sovereign debt crisis, at the Elysee Palace, Paris, August 16, 2011

The European Commission supports the proposals made by France and Germany on Tuesday to shore up the eurozone, its spokesperson said Wednesday. The markets, however, have not reacted so favorably.

Olivier Bailly, the EU spokesperson, said the commission supports the objectives put forward by French President Nicolas Sarkozy and German Chancellor Angela Merkel on Tuesday.  

"We already mentioned the need to strengthen the economic part of the economic and monetary union," Bailly said. "What is happening now since the beginning of the crisis, and what has been announced yesterday as a proposal by France and Germany, go exactly in this direction.”

Watch a related report by Mil Arcega

Sarkozy and Merkel held emergency talks Tuesday to discuss Europe’s sovereign debt crisis.

Following the talks, they said closer economic integration in Europe is needed. Sarkozy called for a “new economic government” that would be formed of the 17 eurozone government leaders. He said it should meet twice yearly and be led by European President Herman Van Rompuy.

France and Germany also called for constitutional amendments across the eurozone that would require governments to balance their budgets.

The leaders backed away from the idea of issuing “eurobonds” - bonds that would be issued by the eurozone as a whole rather than by individual countries. Some analysts, investors, and European politicians think eurobonds would be the best way to restore faith in European debt and calm volatile markets.

Bailly said Wednesday that eurobonds are an interesting idea but are not on the agenda right now.

"We don't think that this is a solution for today's problem and we don't think that there is a political consensus within Europe to move forward today with this idea," said Bailly.

Overall the market reaction to the new plans was not positive, with shares falling early in the trading day Wednesday, followed by a slight recovery.

Dominique Dequidt, an Asset Manager at KBL Richelieu in France, said the market reaction is uncertain because the decisions made Tuesday were not as bold as the markets were expecting.

France and Germany said they don’t want to increase the size of the European Union’s rescue fund, which is worth hundreds of billions of dollars. Some investors say it needs to value at least $2 trillion to be effective.

Iain Begg, a European economics expert with the London-based research group Chatham House, said Sarkozy and Merkel haven’t put “enough meat on the bones” of their proposal. He said that’s important because economic integration in Europe is vital.

When VOA asked him why, he replied, "Well, because it enables a much stronger defensive bulwark to be created to oppose the market's pressures, which have been so devastating over the last 18 months. And it's also the sort of structure that is going to be more enduring in exactly the same way as in the U.S., where having a single treasury bond is a very significant source of strength for the American economy."

But Begg said the process of integration is inevitably slow, not least because it often lacks popular support. He said, for example, that when it comes to doling out money, the population of Europe’s largest economy is hesitant.

"In Germany, for example, there is clearly strong opposition to the idea of their tax base somehow being responsible for the debts of other countries," he said. "In other countries you might find support for integration across something like the military sphere, and still they will look for closer integration on social issues. So you have to look at it dossier by dossier to find out what populations are really in favor of or opposed to."

Merkel and Sarkozy put forward a plan Tuesday for a Europe-wide tax on financial transactions.

You May Like

As US Strikes Syria, China Sees Parallels at Home

Beijing is debating how much support to give international coalition against IS militants and trying to figure out how many Chinese nationals may have joined group overseas More

CDC: Ebola Could Infect 1.4 M by 2015

US health officials say if efforts to curb the outbreak are not increased, cases will soar dramatically by early next year More

Video USAID Provides $231 Million for Girls Education in 5 Countries

US Agency for International Development partners with celebrities to call attention to importance of education for girls worldwide More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
NASA’s MAVEN Probe Enters Mars Orbiti
X
September 22, 2014 9:20 PM
NASA’s newest Mars probe, called MAVEN, has successfully entered its designated orbit around the Red Planet. Scientists will use its sophisticated instruments to try to learn what happened to the atmosphere Mars had a few billion years ago. VOA’s George Putic has more.
Video

Video NASA’s MAVEN Probe Enters Mars Orbit

NASA’s newest Mars probe, called MAVEN, has successfully entered its designated orbit around the Red Planet. Scientists will use its sophisticated instruments to try to learn what happened to the atmosphere Mars had a few billion years ago. VOA’s George Putic has more.
Video

Video For West Ukraine City, Conflict Far Away Yet Near

The western Ukrainian city of Lviv prides itself on being both physically and culturally close to Western Europe. The Russian-backed separatists in the eastern part of the country are 1,200 kilometers away, and seemingly even farther away in their world view. Still, as VOA’s Al Pessin reports, the war is having an impact in Lviv.
Video

Video Saving Global Fish Stocks Starts in the Kitchen

With an estimated 90 percent of the world’s larger fish populations having already vanished, a growing number of people in the seafood industry are embracing the concept of sustainable fishing and farming practices. One American marine biologist turned restaurateur in Thailand is spreading the word among fellow chefs and customers. VOA Correspondent Steve Herman reports from Bangkok.
Video

Video Chinese Admiral Key in China’s Promotion of Sea Links

China’s President last week wrapped up landmark visits to India, Sri Lanka and Maldives, part of a broader campaign to promote a new “Maritime Silk Road” in Asia. The Chinese government’s promotion efforts rely heavily on the country’s best-known sailor, a 15th century eunuch named Zheng He. VOA's Bill Ide reports from the sailor’s hometown in Yunnan on the effort to promote China’s future by recalling its past.
Video

Video Experts Fear Ebola Outbreak ‘Beyond Our Capability to Contain’

Each day brings with it new warnings about the deadly Ebola outbreak already blamed for killing more than 2,600 people across West Africa. And while countries and international organizations like the United Nations are starting to come through on promises of help for those most affected, the unprecedented speed with which the virus has spread is raising questions about the international response. VOA's Jeff Seldin has more from Washington.
Video

Video Natural Gas Export Plan Divides Maryland Town

A U.S. power company that has been importing natural gas now wants to export it. If approved, its plant in Lusby, Maryland, would likely be the first terminal on the United States East Coast to export liquefied natural gas from American pipelines. While some residents welcome the move because it will create jobs, others oppose it, saying the expansion could be a safety and environmental hazard. VOA’s Deborah Block examines the controversy.
Video

Video Difficult Tactical Battle Ahead Against IS Militants in Syria

The U.S. president has ordered the military to intensify its fight against the Islamic State, including in Syria. But how does the military conduct air strikes in a country that is not a U.S. ally? VOA correspondent Carla Babb reports from the Pentagon.
Video

Video Iran, World Powers Seek Progress in Nuclear Talks

Iran and the five permanent members of the U.N. Security Council plus Germany, known as the P5 + 1, have started a new round of talks on Iran's nuclear program. VOA State Department correspondent Pam Dockins reports that as the negotiations take place in New York, a U.S. envoy is questioning Iran's commitment to peaceful nuclear activity.
Video

Video Migrants Caught in No-Man's Land Called Calais

The deaths of hundreds of migrants in the Mediterranean this week has only recast the spotlight on the perils of reaching Europe. And for those forunate enough to reach a place like Calais, France, only find that their problems aren't over. Lisa Bryant has the story.
Video

Video Westgate Siege Anniversary Brings Back Painful Memories

One year after it happened, the survivors of the terror attack on Nairobi's Westgate Shopping Mall still cannot shake the images of that tragic incident. For VOA, Mohammed Yusuf tells the story of victims still waiting for the answer to the question 'how could this happen?'
Video

Video Whaling Summit Votes to Uphold Ban on Japan Whale Hunt

The International Whaling Commission, meeting in Slovenia, has voted to uphold a court ruling banning Japan from hunting whales in the Antarctic Ocean. Conservationists hailed the ruling as a victory, but Tokyo says it will submit revised plans for a whale hunt in 2015. Henry Ridgwell reports from London.
Video

Video A Dinosaur Fit for Land and Water

Residents and tourists in Washington D.C. can now examine a life-size replica of an unusual dinosaur that lived almost a hundred million years ago in northern Africa. Scientists say studying the behemoth named Spinosaurus helps them better understand how some prehistoric animals adapted to life on land and in water. The Spinosaurus replica is on display at the National Geographic museum. VOA’s George Putic has more.
Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.

AppleAndroid