French President Nicolas Sarkozy and German Chancellor Angela Merkel met Monday in Paris as the European Union considers a drastic overhaul of its powers in an attempt to keep their currency afloat.
The two leaders are debating a proposal to give the EU more say in the national budgets of countries that use the euro as their currency. Merkel is pressing for more central control of the budget, whereas Sarkozy is reluctant to let the EU take powers away from national governments.
A fiscal union is in the works, something Merkel said has been in need for quite some time ­— a mechanism to make sure all users of the Euro are in sound financial state. The two leaders agree that clear rules need to be written so budget rules can be properly enforced.
Both sides have supported the European Central Bank and are in favor of keeping its independence amid fears that it would begin printing off money to prop up troubled governments and risk hyperinflation.
President Barack Obama recently called the crisis a serious threat to the U.S. economy and noted the fact that the EU is one of America’s biggest trading partners. For this reason U.S. Treasury Secretary Tim Geithner is spending most of this week in Europe to meet with top officials like Sarkozy and new Italian Prime Minister Mario Monti.
By Sami Pathan