BRUSSELS - German and French officials have
discussed plans for a radical overhaul of the European Union that would involve
setting up a more integrated and potentially smaller euro zone, EU sources say.
"France and Germany have had intense
consultations on this issue over the last months, at all levels," a senior
EU official in Brussels told Reuters, speaking on condition of anonymity
because of the sensitivity of the discussions.
"We need to move very cautiously, but the
truth is that we need to establish exactly the list of those who don't want to
be part of the club and those who simply cannot be part," the official
said.
French President Nicolas Sarkozy gave some
flavor of his thinking during an address to students in the eastern French city
of Strasbourg on Tuesday, when he said a two-speed Europe -- the euro zone
moving ahead more rapidly than all 27 countries in the EU -- was the only model
for the future.
The discussions among senior policymakers in
Paris, Berlin and Brussels raised the possibility of one or more countries
leaving the euro zone while the remaining core pushes on toward deeper economic
integration, including on tax and fiscal policy.
The change has been discussed on an
"intellectual" level but had not moved to operational or technical
discussions, the EU official said. A French finance ministry spokesman denied
there was any project in the works to reduce the currency bloc's membership .
"There have been no conversations between
French and German authorities at any level on decreasing the size of the euro
zone," the spokesman said .
A radical overhaul of the European Union would
be opposed by many members.
"This will unravel everything our
forebears have painstakingly built up and repudiate all that they stood for in
the past sixty years," one EU diplomat told Reuters."This will redraw
the map geopolitically and give rise to new tensions. It could truly be the end
of Europe as we know it."
In Berlin, European Commission President Jose
Manuel Barroso warned about the economic costs of any splits in the euro zone.
Germany's gross domestic product could contract and its economy would shed one
million jobs, he said in a speech.
Barroso said any push toward deeper economic
policy integration should not come at the price of creating new divisions among
EU members.
"There cannot be peace and prosperity in
the North or in the West of Europe, if there is no peace and prosperity in the
South or in the East," he said.
To an extent the taboo on a country leaving
the 17-member currency bloc was already broken at the G20 summit in Cannes last
week, when German Chancellor Angela Merkel and Sarkozy both effectively said that
Greece might have to drop out if the euro zone's long-term stability was to be
maintained.
But the latest discussions among European
officials point to a more fundamental re-evaluation of the 12-year-old currency
project -- including which countries and what policies are needed to keep it
strong and stable -- before Europe's debt crisis manages to break it apart.
In large part the aim is to reshape the
currency bloc along the lines it was originally intended; strong, economically
integrated countries sharing a currency, before nations such as Greece managed
to get in.
"In doing this exercise, we will be very
serious on the criteria that will be used as a benchmark to integrate and share
our economic policies," the senior EU official said.
One senior German government official said it
was a case of pruning the euro zone to make it stronger.
"You'll still call it the euro, but it
will be fewer countries," he said, without identifying those that would
have to drop out.
"We won't be able to speak with one voice
and make the tough decisions in the euro zone as it is today. You can't have
one country, one vote," he said, referring to rules that have made
decision-making complex and slow, exacerbating the crisis.
Speaking in Berlin, Merkel reiterated a call
for changes to be made to the EU treaty -- the laws which govern the European
Union -- saying the situation was now so unpleasant that a rapid breakthrough
was needed.
From Germany's point of view, altering the EU
treaty would be an opportunity to reinforce euro zone integration and could
potentially open a window to make the mooted changes to its make-up.
EU officials have told Reuters treaty change
will be formally discussed at a summit in Brussels on December 9, with an
'intergovernmental conference', the process required to make alterations,
potentially being convened in the new year, although multiple obstacles remain
before such a step is taken.
Reuters
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