Aug. 16 - After crucial talks in Paris the leaders of France and Germany have proposed greater ties in the the euro zone including electing a president, but did not suggest increasing its bailout fund or selling euro zone bonds. Andrew Potter reports.
All smiles, but the pressure could hardly be higher for German leader Angela Merkel and her French counterpart Nicolas Sarkozy. The talks in Paris, another step by Europe's two biggest economies to restore fragile investor confidence in the euro zone. After two hours, some answers. The leaders proposing an economic government for the bloc. SOUNDBITE: NICOLAS SARKOZY, FRENCH PRESIDENT, SAYING (French): "This economic government will be made up of heads of state and government and will meet twice a year, and more if necessary. It will elect a stable president for two and half years." Merkel and Sarkozy said increasing the euro zone bailout fund wasn't necessary, and neither was issuing euro zone bonds. SOUNDBITE: Germany Chancellor Angela Merkel, saying (German): "I neither think that Europe is at the point of needing its last resort, nor do I think that we can solve these problems with what I have called a bang of a drum. And therefore I think that what we are proposing here is the means with which we can solve the crisis right now and win back trust, step by step. I do not think euro bonds will help us in this." At times the debt crisis has looked set to tear the euro zone apart. Greece, Ireland and Portugal have so far needed emergency aid, and there are worrying questions over the financial health of Spain and Italy. But Merkel and Sarkozy agreed keeping the common European currency intact was crucial. SOUNDBITE: French President, Nicolas Sarkozy, saying (French): "We want to express our absolute will to defend the euro and assume Germany and France's particular responsibilities in Europe and to have on all of these subjects a complete unity of views and suggestions." The leaders also proposed introducing a tax on financial tranactions in Europe. They also want all 17 euro zone countries to make balanced finances a constitutional goal by the middle of next year. Angela Merkel has said there's no one answer to the euro zone's problems. Whether investors think closer economic co-operation will help end the crisis should become clearer when European markets reopen. Andrew Potter, Reuters