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Merkel: Our generation must create a political union in Europe

Step by step, Europe needs to move towards political union, said German Chancellor Angela Merkel. She define the debt crisis in the euro area as “the most serious challenge for the region after World War II.”

With its one-hour speach infront thousands of delegates of the Christian Democratic Union, Merkel did not offer new ideas to solve the crisis, which forced Greece, Ireland and Portugal to seek international financial assistance and pose existential concern for monetary union as a whole.

Merkel, however, clearly pointed out that Germany will have to make additional sacrifices. Party congress in Leipzig runs under the motto “For Europe – for Germany.”

“The challenge of our generation is to finish what we started in Europe, and namely the step by step to create a political union,” she said infront of the party congress in Leipzig. “Europe is experiencing one of its worst crises, perhaps the worst since the Second World War,” she said.

The focus on the two-day party meeting had to be the German education system. Instead, the talks were dominated by issues of European debt crisis, which continued to grow even after the election of a new expert governments in Greece and Italy.

If Germany does not have early parliamentary elections, the mandate of Merkel, who came to power in 2005, will expire in 2013. The German Chancellor seems aware that she can easily become another victim of a political crisis if she fails to play her cards cleverly enough.

In 1999, exactly the Christian Democratic Union, led by then-Chancellor Helmut Kohl united Germany to the Pact for the euro.
Almost 13 years later, many German conservatives are worried about the funded with taxpayers’ money aid for troubled eurozone countries. Conservatives are extremely sensitive to the fiscal irresponsibility of the countries of the periphery of the euro area and the danger to the crisis to compromise the independence of the European Central Bank (ECB).

Some fractions of the party of Merkel even agree that the whole project with the European single currency was a mistake that must now be corrected.

Merkel, however, highlighted that Germany has a responsibility to their partners and that it is vulnerable if other eurozone countries are overtaken by the crisis. Chancellor reminded her colleagues that 60% of German exports go to the European Union (EU).

“Irish problems are Slovakian problems, Greek problems are Dutch problems, the Spanish problems are our problems,” said Merkel. “Our responsibility does not end at the German border,” she said.

Meanwhile, Merkel emphasizes that there are “red lines” that Germany is not ready to cross, rejecting once again the idea of ​​issuing common Eurobonds and other hasty decisions that in Berlin would not encourage European governments to adhere to responsible fiscal policy.

The problem is that the crisis was not created overnight, but it is result of decades of mistakes. Therefore we can not resolve it by waving a magic wand, says Merkel. “We are facing a long and difficult road,” she added.

If the crisis deepened in the euro zone before the next elections in Germany in which one or more countries are forced to leave the union – an event with serious economic consequences for the region as a whole, even the most skillful political maneuvering would not save Chancellery chair.

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China wants to save Europe again

New request from China to help Europe was made the day on which European leaders gathered for the second three days meeting, which had to be sought the debt crisis and problems in Greece.

Emerging market economies and China in particular are reluctant to participate in the European Support Fund through the International Monetary Fund (IMF). It said an unnamed source “close to decision makers in Europe,” quoted in “China Daily”.

According to this source, “the consent of the emerging market economies may be included in the final document of the summit of European leaders’ forum in Brussels if they decided to open up that fund for the participation of foreign investors – both private and public. Formal confirmation of this information was not received.

The capacity of the European Financial Stability Fund is now 440 billion dollars. It is believed that in terms of markets that this is not enough for the Fund to cope with the situation, if the crisis infect a large economy such as Italy. Recently emerged ideas fund be increased to 1 trillion euros. Its fate would have been a major subject of discussion at a meeting of leaders of the eurozone.

Reuters said before the meeting of leaders of the euro area, the chances to reach an agreement on measures against the debt crisis appear slim. EU expressed its readiness to support banks, but does not indicate a specific figure for their recapitalization, said in the draft of the meeting, told Reuters. “New York Times” also predicts failure of the meeting.

Discussions to reach a deal on the euro become complicated, including significant restructuring of the Greek debt, pouring new capital in European banks and increasing the rescue fund so as to prevent financial panic in Italy and also in Greece and Portugal, the publication notes. Meanwhile, shortly before the summit, the German Parliament Chancellor Angela Merkel supported the project. Lawmakers of the Bundestag have received a secret report which says that the future of Greece is a bleak.

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