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EUROPEAN UNION

Merkel and Sarkozy vow joint front against financial crisis

French President Nicolas Sarkozy and German Chancellor Angela Merkel vowed Saturday to work together on the eve of a key meeting aimed at forging a united European response to the financial crisis.

Merkel and Sarkozy vow joint front against financial crisis
Photo: DPA

The leaders of the 15 eurozone economies and Britain’s Prime Minister Gordon Brown were due in Paris on Sunday for talks and the continent appeared to be leaning towards a British-style plan of partial bank nationalisation.

Ahead of Sunday’s summit, Sarkozy met Merkel in Colombey-les-Deux-Eglises, home village and final resting place of General Charles de Gaulle, in a bid to coordinate the positions of the eurozone’s two largest economies.

“All decisions, all preparations and all analyses, we’re making together,” Sarkozy insisted, denying reports that he had ever proposed setting up a joint European bank bail-out fund, an idea rejected by Merkel’s Germany.

“We are analysing the crisis together. Germany and France have perfectly identical views on the consequences to take from that for the short, medium and long term,” the French leader said.

Merkel agreed Paris and Berlin were “on the same path as regards putting in place a concerted and coherent reaction for the eurozone” but noted that within this there was “naturally room for manoeuvre for each member state.”

The pair said they expected to make more concrete announcements about economic measures to contain the effects of the credit crunch and the week’s stock market freefall on Sunday after the summit.

As the European leaders met in France, the finance ministers of the world’s Group of Seven industrial powers were in the United States to discuss a global response. After G7 talks in Washington on Friday , US Treasury Secretary Henry Paulson said his government was ready to invest directly in banks for the first time since the Great Depression in a bid to restore confidence.

This move followed the decision by Britain’s Brown to guarantee inter-bank lending and to offer to take stakes in some of the country’s biggest banks in a programme of partial nationalisation.

Europe now seems likely to follow London down this route, which bankers hope will restore confidence and restart the frozen inter-bank lending market. France’s finance minister, Christine Lagarde, said French banks were relatively well positioned and would probably not need the government to buy their stocks, but other European economies might follow the British example.

“It’s very likely, because European banks are also under-capitalised,” she said in an interview with France Info radio on Saturday. “We have seen Great Britain, which is outside the eurozone, make propositions in this area. We’ll have to see about that in the eurozone, but I suppose it’s one of the options.”

On Friday, the German daily Die Welt reported that Germany was working on a British-style plan, and a senior European offical told AFP that Brown’s idea was a “good one” and would be discussed by the eurozone 15.

“It would be smart to follow the British example at the European level,” he said, speaking on condition of anonymity so as not to pre-empt the summit. “I spoke to Madame Merkel and I think she’s open to a European decision.”

Under the British programme, unveiled on Wednesday, £50 billion (€64 billion) of taxpayers’ money has been made available to buy shares in the country’s banks.

Britain is not a member of the eurozone, but Sarkozy sid he would meet Brown separately at the Elysee Palace just two hours before the main summit in order to “maximise the chances” of full European cooperation.

Before their talks Merkel and Sarkozy inaugurated a memorial to De Gaulle in Colombey-les-deux-Eglises, the village east of Paris that hosted the famous summit between the general and Chancellor Konrad Adenauer 50 years earlier.

On Sunday, Merkel and Sarkozy and their 13 colleagues from the other members of the single-currency bloc will hold a crisis summit in Paris. Some of the eurozone leaders were annoyed at being locked out of last week’s talks, and Spain’s Prime Minister Jose Luis Rodriguez Zapatero had called for a full meeting of members on Friday when he visited Sarkozy.

POLITICS

France vows to block EU-South America trade deal in current form

France has vowed to prevent a trade deal between the European Union and the South American Mercosur bloc from being signed with its current terms, as the country is rocked by farmer protests.

France vows to block EU-South America trade deal in current form

The trade deal, which would include agricultural powers Argentina and Brazil, is among a litany of complaints by farmers in France and elsewhere in Europe who have been blocking roads to demand better conditions for their sector.

They fear it would further depress their produce prices amid increased competition from exporting nations that are not bound by strict and costly EU environmental laws.

READ ALSO Should I cancel my trip to France because of farmers’ protests?

“This Mercosur deal, as it stands, is not good for our farmers. It cannot be signed as is, it won’t be signed as is,” Economy Minister Bruno Le Maire told broadcasters CNews and Europe 1.

The European Commission acknowledged on Tuesday that the conditions to conclude the deal with Mercosur, which also includes Paraguay and Uruguay, “are not quite there yet”.

The talks, however, are continuing, the commission said.

READ ALSO 5 minutes to understand French farmer protests

President Emmanuel Macron said Tuesday that France opposes the deal because it “doesn’t make Mercosur farmers and companies abide by the same rules as ours”.

The EU and the South American nations have been negotiating since 2000.

The contours of a deal were agreed in 2019, but a final version still needs to be ratified.

The accord aims to cut import tariffs on – mostly European – industrial and pharmaceutical goods, and on agricultural products.

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