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

Ukraine: Mysterious 'Roaming Tank' Reportedly Takes Aim at Smugglers

Ukraine's TV, print media, Facebook abuzz with reports a 'roaming tank' is on the loose, destroying vehicles of those involved in smuggling More

US Wildlife Service Begins Probe of Killing of Cecil the Lion

Minnesota man accused of killing beast is in hiding, has been asked to contact US officials; White House to review extradition petition More

Video Kerry Five-Nation Tour to Cover Security, Iran Nuclear Deal

Secretary of state will visit Egypt, Qatar, Singapore, Malaysia, Vietnam to discuss security issues, Iran nuclear deal, Trans-Pacific Partnership More

This forum has been closed.
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.
Booming London Property a ‘Haven for Dirty Money’i
July 29, 2015 9:34 PM
Billions of dollars of so-called ‘dirty money’ from the proceeds of crime - especially from Russia - are being laundered through the London property market, according to anti-corruption activists. As Henry Ridgwell reports from the British capital, the government has pledged to crack down on the practice.

Video Booming London Property a ‘Haven for Dirty Money’

Billions of dollars of so-called ‘dirty money’ from the proceeds of crime - especially from Russia - are being laundered through the London property market, according to anti-corruption activists. As Henry Ridgwell reports from the British capital, the government has pledged to crack down on the practice.

Video Hometown of Boy Scouts of America Founder Reacts to Gay Leader Decision

Ottawa, Illinois, is the hometown of W.D. Boyce, who founded the Boy Scouts of America in 1910. In Ottawa, where Scouting remains an important part of the legacy of the community, the end of the organization's ban on openly gay adult leaders was seen as inevitable. VOA's Kane Farabaugh reports.

Video 'Metal Muscles' Flex a New Bionic Hand

Artificial limbs, including the most complex of them – the human hand – are getting more life-like and useful due to constant advances in tiny hydraulic, pneumatic and electric motors called actuators. But now, as VOA’s George Putic reports, scientists in Germany say the future of the prosthetic hand may lie not in motors but in wires that can ‘remember’ their shape.

Video Russia Accused of Abusing Interpol to Pursue Opponents

A British pro-democracy group has accused Russia of abusing the global law enforcement agency Interpol by requesting the arrest and extradition of political opponents. A new report by the group notes such requests can mean the accused are unable to travel and are often unable to open bank accounts. VOA's Henry Ridgwell reports.

Video 'Positive Atmosphere' Points Toward TPP Trade Deal in Hawaii

Talks on a major new trade agreement among 12 Pacific Rim nations are said to be nearing completion in Hawaii. Some trade experts say the "positive atmosphere" at the discussions could mean a deal is within reach, but there is still hard bargaining to be done over many issues and products, including U.S. drugs and Japanese rice. VOA's Jim Randle reports.

Video Genome Initiative Urgently Moves to Freeze DNA Before Species Go Extinct

Earth is in the midst of its sixth mass extinction. The last such event was caused by an asteroid 66 million years ago. It killed off the dinosaurs and practically everything else. So scientists are in a race against time to classify the estimated 11 million species alive today. So far only 2 million are described by science, and researchers are worried many will disappear before they even have a name. VOA’s Rosanne Skirble reports.

Video Scientists: One-Dose Malaria Cure is Possible

Scientists have long been trying to develop an effective protection and cure for malaria - one of the deadliest diseases that affects people in tropical areas, especially children. As the World Health Organization announces plans to begin clinical trials of a promising new vaccine, scientists in South Africa report that they too are at an important threshold. George Putic reports, they are testing a compound that could be a single-dose cure for malaria.

Video 'New York' Magazine Features 35 Cosby Accusers

The latest issue of 'New York' magazine features 35 women who say they were drugged and raped by film and television celebrity Bill Cosby. The women are aged from 44 to 80 and come from different walks of life and races. The magazine interviewed each of them separately, but Zlatica Hoke reports their stories are similar.

Video US Calls Fight Against Human Trafficking a Must Win

The United States is promising not to give up its fight against what Secretary of State John Kerry calls the “scourge” of modern slavery. Officials released the country’s annual human trafficking report Monday – a report that’s being met with some criticism. VOA’s National Security correspondent Jeff Seldin has more from the State Department.

Video Washington DC Underground Streetcar Station to Become Arts Venue

Abandoned more than 50 years ago, the underground streetcar station in Washington D.C.’s historic DuPont Circle district is about to be reborn. The plan calls for turning the spacious underground platforms - once meant to be a transportation hub, - into a unique space for art exhibitions, presentations, concerts and even a film set. Roman Mamonov has more from beneath the streets of the U.S. capital. Joy Wagner narrates his report.

Video Europe’s Twin Crises Collide in Greece as Migrant Numbers Soar

Greece has replaced Italy as the main gateway for migrants into Europe, with more than 100,000 arrivals in the first six months of 2015. Many want to move further into Europe and escape Greece’s economic crisis, but they face widespread dangers on the journey overland through the Balkans. VOA's Henry Ridgwell reports.

Video Stink Intensifies as Lebanon’s Trash Crisis Continues

After the closure of a major rubbish dump a week ago, the streets of Beirut are filling up with trash. Having failed to draw up a plan B, politicians are struggling to deal with the problem. John Owens has more for VOA from Beirut.

Video Paris Rolls Out Blueprint to Fight Climate Change

A U.N. climate conference in December aims to produce an ambitious agreement to fight heat-trapping greenhouse gases. But many local governments are not waiting, and have drafted their own climate action plans. That’s the case with Paris — which is getting special attention, since it’s hosting the climate summit. Lisa Bryant takes a look for VOA at the transformation of the French capital into an eco-city.

Video Racially Diverse Spider-Man Takes Center Stage

Whether it’s in a comic book or on the big screen, fans have always known the man behind the Spider-Man mask as Peter Parker. But that is changing, at least in the comic book world. Marvel Comics announced that a character called Miles Morales will replace Peter Parker as Spider-Man in a new comic book series. He is half Latino, half African American, and he is quite popular among comic book fans. Correspondent Elizabeth Lee reports from Los Angeles.

Video Historic Symbol Is Theme of Vibrant New Show

A new exhibit in Washington is paying tribute to the American flag with a wide and eclectic selection of artwork that uses the historic symbol as its central theme. VOA’s Julie Taboh was at the DC Chamber of Commerce for the show’s opening.

VOA Blogs