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Merkel and Cameron struggle to show unity

The Local · 18 Nov 2011, 16:42

Published: 18 Nov 2011 16:42 GMT+01:00

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After tensions flared in the run up to their talks in Berlin, the two conservative leaders tried to paper over their differences but failed to make headway on crucial issues such as the role of the European Central Bank (ECB).

Cameron renewed his appeal for all eurozone institutions to do their utmost to rescue the common currency, in response to a question about his call for the ECB to be used as a "big bazooka" to defend the euro.

"As we agreed at the G20, all the institutions of the eurozone have to stand behind and back the currency and do what's necessary to defend it - that is what needs to happen," Cameron told a joint press conference.

But Merkel underlined her opposition to the ECB buying up bonds on a major scale and becoming the lender of last resort to debt-mired countries.

"You have to be careful not to pretend to have powers that you do not," she said, following remarks she made this week that the ECB would not have the right to take such action under the existing rules. The markets will catch on quickly that that will not work."

New ECB chief Mario Draghi also brushed off the political pressure on Friday, saying the bank’s overriding task was to safeguard price stability and stressing that governments had to get their finances in order to buck the crisis.

Cameron and Merkel also differed on the prospect of a financial transaction tax (FTT), which Cameron reiterated that Britain could only accept if it were introduced globally. The City of London fears such a tax would scare off investors.

Merkel has said she would be willing to press forward on the tax in the 17-member eurozone alone if the 27 EU members could not agree on it. Britain belongs to the EU but not the eurozone.

"Both our countries would introduce (the FTT) immediately on a global level but we did not make any progress on the European level," she said.

Cameron nevertheless stressed his confidence in the eurozone's ability to find its way out of the debt crisis and said Britain had a key stake in the euro's success.

"This is obviously a difficult time - you can see that in the markets - but I don't underestimate for a minute the commitment of countries like Germany and those in the eurozone, to make the currency work," he said.

Merkel also turned on the charm after a trying week, saying that she was confident they would strike a compromise.

"Whenever David and I work together on a problem, we have always found a solution," she said.

Merkel’s parliamentary party leader Volker Kauder had upset certain sections of the British eurosceptic press ahead of the meeting by calling for the UK to play its part in rescuing the euro – and saying Europe was “speaking German” in its joint determination to solve the problem.

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Her Finance Minister Wolfgang Schäuble managed to add introduce further piquancy to the meeting by suggesting that eventually all European countries including the UK would join the euro. “It will perhaps go faster than some on the British Isles believe,” he said.

At the end of the Friday press conference, the pair addressed the language issue – even if they refused to touch the idea of Britain adopting the euro.

Merkel told the journalists she wanted to improve not only her Russian language skills but also her English, but then added that both she and Cameron were speaking “the language of Europe.”

AFP/The Local/hc

The Local (news@thelocal.de)

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Your comments about this article

17:09 November 18, 2011 by Beachrider
There is a bit-o-stinkie in this discussion...

If the UK is commited to the Euro, they why did they make the point of maintaining their NON-EURO CURRENCY? It must have meant something, or they wouldn't have made such a fuss about it? Didn't Denmark do the same thing?

I know that the Pound and Euro are connected, but there must have been something important for the UK to insist that they NOT use the Euro...
18:00 November 18, 2011 by FreiburgandCambridge
I think it's because we still want to continue living in the past.

For our currency not to have the queens head on it would be unthinkable. Well, that's what the Rupert Murdoch run press forces us to believe. The aussie Murdoch is the biggest euro sceptic and just happens to own most of the newspapers in the UK.

Sad state.
18:05 November 18, 2011 by Englishted
The Brits have a problem with the Euro as they are paying for it's bail out through the E.U. but have no say in it's running.


The reason the Brits don't have the Euro is it must be voted on in a referendum ,and it simply will not pass.And if the truth be known many E.U. countries would not have joined if they could have voted,Germany would have kept the Mark and it would be a close call if asked if they wanted it back.
20:19 November 18, 2011 by carlm
What a couple of morons. What ever happened to the concept of self reliance? The more you bailout the deadbeats, the more the deadbeats misbehave. And it's not the Euro that's the problem, it's the misbehaving deadbeats.

The trouble with socialism/communism/collectivism, is eventually you run out of other people's money to spend.
20:24 November 18, 2011 by jg.
The current economic situation shows precisely why Britain was right not to join the Euro.

Like every member state of the EU, Britain has a substantial debt problem. Being outside of the Eurozone, Britain has been able to select policies of low interest rates (devaluing the pound) and quantitative easing, along with a programme of cuts. The fiscal options have been and are still not available to Eire, Greece, Italy, Spain, Portugal, etc. - and those countries are stuck with a relatively high interest rate and a relatively high-valued currency, tied as they are, to the very dominant German economy.

Britain is currently committed by treaty to joining the single currency "when conditions are right". Those conditions are never likely to occur while the USA remains Britain's biggest export customer and while the rest of the EU retains a massive trade surplus with the UK (despite the low pound).
21:35 November 18, 2011 by coffejohn
I am coming to the conclusion that Germany and the UK are playing a similar game, wait and see.

If Germany wanted to it could dictate it`s own solution to the financial crisis, he who pays the piper, but it talks about new treaties and other time consuming procedures.

We in the UK also seem to be content to stave off reform, or kick the can again.

Given that the UK and Germany have so much in common I suspect a common solution may emerge, a new Northern EZone with the UK in it.

Not yet but sooner than some think.
22:25 November 18, 2011 by derExDeutsche
anybody that thinks that Euro skepticism is Rupert Murdoch's fault is an unadulterated idiot. Its like saying Gravity is Isaac Newton's fault. I'm not sure what @FreiburgandCambridge does for a living that makes him think that the UK would be in a much 'Happier State' had they joined the EU. But maybe while he's at it, he would like to blame the EU debt problems on President Bush as well? What I can assure anybody is, his opinion is in the minority. In fact, lets let the UK hold a vote on joining the EU right now. Oh what..? No? So it turns out the Eurocrats like @FreiburgandCambridge don't really fancy democracy all that much, either.
08:57 November 19, 2011 by catjones
carlm...there's a fire on board the ship and your solution is to let that part of the ship to put it out themselves. If they don't? That's their problem, not yours.
10:44 November 19, 2011 by toemag
If the EU was a boat, it has run out of fuel, and it's drifting aimlessly. The boat is listing heavily to the stern, and there is a storm due in the very near future, that will either sink the boat outright or capsize it. When the boat goes down there will be very few life rafts in the water.

Make of the above what you may, but the SOS that was sent, was only heard by the Chinese, remember those with very low "Human rights" standards, and they are only interested as we on the boat are a big part of their export customers.
10:47 November 19, 2011 by christopheuk25
In God's name when will the German taxpayer put a stop to their Government raping their treasury to persue a political ideal that was doomed to failure from the onset.These dreams are the dreams of dangerous technocrats ,the people have no say in it,but must fund it.Russia was a prime example and we have seen the horror that that was,the Eu is identical but with a different face
11:44 November 19, 2011 by coffejohn
It seems to me that Germany is in a dilemma of it`s own making.

It`s support for the EZone is based on logic, which they will follow to it`s inevitable conclusion, as they do.

But they know, subliminally, that there is a flaw in their logic. Until they can articulate that flaw they will plough on in a state of denial.

Sadly the only people telling them what that flaw is are the UK, the last people in the world they want advice from.
13:29 November 19, 2011 by HelloOutThere
@ coffejohn:

Why should Germany take advice from the UK which economically is not doing much better than Germany? Why should Germany take advice from a political entitity whose debts are at least as high as Germany's debts? Why should Germany take advice from a country whose traditional industry is almost completely in the hands of foreign investors? Why should Germany take advice from an entitity which wants to solve problems by printing more and more money? And last, but not least, why should Germany take advice from the UK whose economic system is more and more based on the financial services who eventually caused the financial crises?
15:50 November 19, 2011 by Sastry.M
If subjects of the U.K can accept German as a second language in school curriculum, the English channel can be bridged with a better European understanding. If the British opt only for their Pound with the Queen's Crown, there may not be any objection for the Germans because of Saxon Hanoverian lineage. But the British accepting the Euro is fraught with many problems, which all people of the U.K many not agree, even if the majority English may show favor.

Because of European ethnicity the British cannot ignore their cultural heritage. As an erstwhile major colonial power when the pound played vital role in all world monitory transactions with an astute faith of promise benefiting the Europeans as well transacting with new world ,until the dollar gained supremacy, is something the Europeans cannot forget.

Indeed, with both the Euro as well as the Pound in currency, the Europeans including the British, should seek means of defending European economy because God created them as Karmayogis to plod in fields and toil in factories for productive labor and support life free from speculative fortunes.
21:31 November 19, 2011 by ChrisRea
Well, at least UK is constant in its lack of leadership. "We will adopt the financial transaction tax (because we know it is good), but first everybody else should do it." Typical thinking for the weak. In the same time, Germany leads by example. If they think something is good, they will do it, not wait first for the others. They decided nuclear power if bad - they are exchanging for other energy resources.

The irony is that UK has no bad experience with stamp tax, which is pretty much similar to the financial transaction tax.
08:00 November 20, 2011 by Englishted

Stamp tax was on property? .

Also you examples on leadership are questionable, what about anti smoking laws for example ,and who are the "They decided" I don't recall and vote on nuclear energy? . So "They decided" what was good for us ,that was nice of them.
10:24 November 20, 2011 by ChrisRea
@ Englishted

No, stamp tax was introduced as an ad valorem tax on share purchases (it applies to transfers of certificated stock). Additionally, the Stamp Duty Reserve Tax was later introduced on share purchases. So it is about financial transactions that we are talking about, not property.

Who decided against nuclear power? The German population (I am sure you noticed the overwhelming signs supporting ousting of nuclear power) and the German government. Referendums are not really necessary for issues that would lead to disproportionate scores. Even if I am not a big fan of this decision, I respect what the majority says.

I fail to see you point about anti smoking laws. We are talking here about issues which affect other countries (banning smoking in Romania does not affect smoking in France).
11:02 November 20, 2011 by aceroni
I am not sure why so many people thinks that Germany would be so much better off without the Euro. Sure the majority of people would like the Deutsch Mark back here but that doesn't mean anything. Germany has always been the major driving force behind the Euro, the reason being to improve the competitiveness of their industries and increase their exports. Before the Euro, Germany was facing much more competition from the sorts of Italy which were always able to play the card of devaluation to increase the appeal on their products. With the Euro this type of competition is gone, and proof is GDP of Germany is increased considerably from 2002.
11:20 November 20, 2011 by christopheuk25
What is the matter with these European politicians?The Euro is collapsing the whole World knows it.A single currency was never a viable concept only the blindingly ignorant Left/Wing,liberalistic will not accept reality,they are so obsessed with their Socialist ideology that they cannot accept that it is nothing more than a fantasy for idiots.The World knows it's dying,businesses all over the World know it's dying,Banks all over the World know it's dying unfortunately the imbecilic EU politicians can't and won't accept reality.The can do nothing it will happen.
11:53 November 20, 2011 by siba
@ christopheuk25

your free market-ideology comment is hillarious since the euro crisis is one result of a the finance crisis which was caused by the unregulated financial industry... so your answer would be deregulation???

despite the "euro crisis" most of middle and northern europe is economically thriving compared to the US or even to the UK. especially the german economy and its employment figures haven't been better since decades. there is no socialist ideology, there is just a "social market economy" which seems to be more sustainable and successful to the more "free market economy" in the US (and in the UK which dismantled its social welfare state also quite a lot). The UK is doing quite bad without the Euro, and the US is deep down anyhow... So why should the Euro die as long as there are economically strong countries keeping its up....

The UK is afraid of the transaction tax since its economy is for the most dependend on the financial industry in London. There is not much more left so their fear is understandable. But this tax would be one important step to make financial businesses more solid, it would pay its share for the public and yes, this tax money would be quite helpful to stabilize the euro... and to make/keep the euro-zone the place with a high quality of life for everyone.
16:55 November 20, 2011 by cambiste
@ChrisRea-as I explained before the problem with a financial transaction tax is its effect on high value intra -day trades,e.g. foreign exchange.Property and to some extent shares are held much longer,market makers in shares are also usually exempt from sdr tax.This tax on shares can anyway be avoided by trading via derivatives e.g. futures,options and e.t.f.'s.Presumably this proposed tax would affect all these instruments with a bad effect on London, also on market liquidity and added expense to the retail customer.
17:01 November 20, 2011 by FreiburgandCambridge
@derExDeutsche your reply is piffle. Newton doesn't influence gravity whereas Rupert Murdoch has a huge influence on British politics.

As for the rest of what you wrote it's just garbage.
17:10 November 20, 2011 by ChrisRea
@ cambiste

Well, what you say is not the problem, but actually the solution. The main benefit of the financial transaction tax is not the money you get out of it, but the discouragement of speculators like George Soros - and that means stability. It is also an ethical solution for UK, as it would mean that everybody would need to pay the tax (so also the banks and other market makers), not only the individuals who are trading now and then.
17:58 November 20, 2011 by cambiste
@ChrisRea-unless the whole world applies this tax,which is unlikely,the speculators would simply use markets outside of the E.U..Ethical taxation is something with which I agree,perhaps a common E.U. fiscal policy is needed first.
18:28 November 20, 2011 by ChrisRea
@ cambiste

Definitely, some of the trading would move outside of the countries that apply the FTT. It is also clear that not all of the trading would do that (we can look at the other countries that already introduced FTT). But if the big boys will make the move, the little ones will probably follow suit. If Europe manages to do that, US and Asia are the next step and then we can say we have it at global level (it will be much easier to have the other countries signing in).

Of course the first steps are the most difficult. That's why I say that Germany shows the leadership which UK lacks.
21:28 November 20, 2011 by Deutschguy
Germany is leading, and the UK is following, or actually, staggering.

And the Euro skeptics are fronting for anti-regulation Big Banks who simply do not want transparency or their own "socialism" to be exposed.

If Angela and the Germans had more cojones, they would sue Goldman for allowing countries to issue debt that was unsustainable in the first place. And Goldman is not the only Big Bank who got high fees for doing it.
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