Berlin and Paris to rescue the Euro by signing a new EU agreement

The leaders of Germany and France demanded the signing of a new EU agreement which must come into effect by March 2012. The latter will ensure that the debt crisis of recent months will not be repeated, posted world news agencies yesterday after the official lunch between French President Nicolas Sarkozy and German Chancellor Angela Merkel.

The leaders of the two most powerful economies prefer the document to be approved by all of the EU’s 27 member-states, but they will also agree to the signing of the agreement only by the 17 EU countries in the Eurozone.

The new treaty will also include the imposition of "automatic sanctions" against EU countries that do not comply with the fiscal rules and have a deficit of above 3% of their Gross Domestic Product (GDP). "We demand the imposition of immediate sanctions in the event of a breach of the rule for an internal deficit of 3% and their operation may be blocked only by a qualified majority of 85% of the participants in the new EU agreement," explained Sarkozy. Angela Merkel, in turn, stated that it is mandatory to demonstrate that Europe is a safe place for investments. Germany backed down from its position that each EU member-state with a deficit of above 3% should be sued by the Court of Justice of the European Union. On the other hand, each EU country must introduce a Fiscal Board. That is, they must draft a "golden rule" in their Constitution, prohibiting the systematic maintenance of budget deficits. "France and Germany will not cover the debts of indebted entities without having the right to control what happens," added Sarkozy.

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