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

Lebanese Media Unite to Support Palestinians in Gaza

Joint newscast billed as Arab world’s first unified news bulletin in support of Hamas-controlled Gaza Strip More

Photogallery Australian PM Alleges ‘Coverup’ at MH17 Crash Site

Meanwhile, Russia's ambassador to Malaysia denies plane's black boxes were opened before they were handed over to Malaysian officials More

Despite Advances in AIDS Treatment, Stigma Lingers

Leading immunologist tells VOA that stigma is often what prevents those infected with disease from seeking treatment 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.
IAEA: Iran Turns its Enriched Uranium Into Less Harmful Formi
X
July 22, 2014 10:26 AM
Iran has converted its stockpiles of enriched uranium into a less dangerous form that is more difficult to use for nuclear weapons, according to the United Nations’ Atomic Energy Agency. The move complies with an interim deal reached with Western powers on Iran's nuclear program last year, in exchange for easing of sanctions. Henry Ridgwell reports for VOA from London.
Video

Video IAEA: Iran Turns its Enriched Uranium Into Less Harmful Form

Iran has converted its stockpiles of enriched uranium into a less dangerous form that is more difficult to use for nuclear weapons, according to the United Nations’ Atomic Energy Agency. The move complies with an interim deal reached with Western powers on Iran's nuclear program last year, in exchange for easing of sanctions. Henry Ridgwell reports for VOA from London.
Video

Video Relic of Saint Draws Catholics Worried About Immigration Issue

A Roman Catholic saint who is a figure of devotion for those crossing the border into the United States is attracting believers concerned about the plight of undocumented immigrants. Mike O'Sullivan reports from Los Angeles, where a relic of Saint Toribio has drawn thousands to local churches.
Video

Video Ukraine Rebels Surrender MH17 Black Boxes

After days of negotiations, a senior separatist leader handed over two black boxes from an airliner downed over eastern Ukraine to Malaysian experts early Tuesday. While on Monday, the U.N. Security Council unanimously demanded that armed groups controlling the crash site allow safe and unrestricted access to the wreckage.
Video

Video In Cambodia, HIV Diagnosis Brings Deadly Shame

Although HIV/AIDS is now a treatable condition, a positive diagnosis is still a life altering experience. In Cambodia, people living with HIV are often disowned by friends, family and the community. This humiliation can be unbearable. We bring you one Cambodian woman’s struggle to overcome a life tragedy and her own HIV positive diagnosis.
Video

Video Nature of Space Exploration Enters New Age

Forty-five years ago this month, the first humans walked on the moon. It was during an era of the space race between the United States and the Soviet Union. World politics have changed since then and -- as Elizabeth Lee reports -- so has the nature of space exploration.
Video

Video Chicago’s Argonne Lab Developing Battery of the Future

In 2012, the U.S. Department of Energy’s Office of Science awarded a $120 million grant to a new technology center focused on battery development - headquartered at Argonne National Laboratory in suburban Chicago, Illinois. As VOA’s Kane Farabaugh reports, there scientists are making the next technological breakthroughs in energy storage.
Video

Video In NW Pakistan, Army Offensive Causes Massive Number of Displaced

Pakistan’s army offensive in North Waziristan has resulted in the large-scale displacement of the local population. VOA's Ayaz Gul reports from northwest Pakistan where authorities say around 80 percent of the estimated 1 million internally displaced persons [IDPs] have settled in Bannu district, while much of the remaining 20 percent are scattered in nearby cities.
Video

Video Kurdish Peshmerga Force Secures Kirkuk, Its Oil

The Kurdistan regional government has sent its Peshmerga troops into the adjacent province of Kirkuk to drive out insurgents, and to secure the area's rich oil fields. By doing this, the regional government has added a fourth province to the three it officially controls. The oil also provides revenue that could make an independent Kurdistan economically strong. VOA’s Jeffrey Young went out with the Peshmerga and filed this report.
Video

Video Malaysia Reeling: Second Air Disaster in Four Months

Malaysia is reeling from the second air disaster in four months involving the country’s flag carrier. Flight 340 vanished in March and despite an extensive search, no debris has been found. And on Thursday, Flight 17, likely hit by a surface-to-air missile, came apart over eastern Ukraine. The two incidents together have left more than 500 people dead. VOA Correspondent Steve Herman reports from Kuala Lumpur.

AppleAndroid