29 August 2012

WSJ: Merkel, Monti bide time until ECB acts

The leaders of Germany and Italy expressed confidence that they are making headway against the eurozone debt crisis, but offered no new initiatives until Germany's highest court and the European Central Bank make key decisions that should have a major impact on the currency area's rescue efforts.

Italian Prime Minister Mario Monti and German Chancellor Angela Merkel held talks in the Berlin chancellery, the latest in a series of bilateral consultations between Ms Merkel and heads of eurozone governments. Speaking to reporters after a working lunch, the two leaders said signs were emerging that the tough fiscal and economic reforms imposed on eurozone members are beginning to have a positive impact. "We are convinced the path we have taken is the right one", Ms Merkel told reporters at a joint news conference with Mr Monti. "We are convinced that these reform efforts will bear fruit and that they will improve the competitiveness of Europe as a whole."

The German-Italian meeting is the latest in the recent round of crisis diplomacy in the German capital. Last week, Ms Merkel held separate talks with French President François Hollande and Greek Prime Minister Antonis Samaras that focused on whether Greece will be granted more time to meet its deficit-reduction targets. A decision on Greece's fate isn't expected until October.

Mr Monti made clear that Germany and Italy still disagree over a key element in Europe's response to the euro crisis. Italy wants the ESM to have its own banking licence, which would make it easier for the bailout fund to refinance itself by borrowing money from the ECB. The idea is all but dead because of Germany's opposition to it and ECB President Mario Draghi has said that giving the ESM a banking licence would violate European Union treaties. Still, Mr Monti suggested a banking licence could come further down the road.

Full article

© Wall Street Journal