GERMAN CHANCELLOR Angela Merkel has said the euro zone is suffering an “existential” crisis, behind which lies a unique opportunity to strengthen EU political and economic union.
Speaking in Aachen yesterday, Dr Merkel said: “This is the biggest test that Europe has experienced since 1990, if not since the Treaty of Rome was agreed 53 years ago,”
In a keynote address as the Polish prime minister Donald Tusk was presented with the Charlemagne Prize for furthering European unity, Dr Merkel said the future of the EU was at stake.
“If the euro fails it’s not just the currency that fails, but Europe and the idea of European unification.”
Dr Merkel said the source of the EU’s problems lay in how the union had grown geographically without keeping pace on other fronts.
“We have a common currency but no common political and economic union. And this is exactly what we must change. To achieve this, therein lies the opportunity of this crisis. If we fail, the consequences cannot be foreseen. If we succeed, Europe will be stronger than ever before.”
The speech was a clear rallying cry to rank-and-file MPs in her Christian Democratic Union (CDU) ahead of next week’s crucial vote on the €750 billion eurozone stability fund. They were critical last week of the Greek bailout but ultimately backed German loans of €22.4 billion over three years.
The crisis appears to be causing a widening split in the CDU’S already fractious coalition with its Free Democrat (FDP) junior partner.
Mr Tusk described the crisis as a “chance for Europe”.
“I see this, paradoxically, as a chance to strengthen and develop Europe further. Europe’s hour is now, and passing this test will be the best proof, ” said Mr Tusk.
Meanwhile, Taoiseach Brian Cowen yesterday criticised Fine Gael’s claim that the EU Commission proposal for more co-ordination of national budgets threatens Ireland’s low corporation tax rate.
“The proposal coming from the commission is not, never has been, and never will be a threat to our corporation tax rate,” Mr Cowen told journalists.
The Taoiseach said the only change being proposed was that there would be greater consultation in the future to protect the economies in the euro zone. He said it was unfortunate the Opposition had sought to create the impression that Ireland’s corporation tax was up for review and he reassured business leaders that there was no question of that happening.
The Fine Gael deputy leader and finance spokesman Richard Bruton had earlier repeated his claim that the commission proposals would involve a final veto over Irish budgets and could lead to tax harmonisation, which could jeopardise Ireland’s corporation tax rate.