By VERENA SCHMITT-ROSCHMANN (AP) – 3 days ago BERLIN — German Chancellor Angela Merkel pushed Thursday for changes in European treaties so that countries running excessive deficits or debts can be reprimanded.European President Herman van Rompuy said there was "no taboo" about discussing that option.
Merkel said after a meeting with van Rompuy in Berlin that clarifying what will happen to countries that do not adhere to the EU stability and growth pact might calm financial markets. "I am of the opinion that we need a change of the treaties," she said.
While van Rompuy stressed that "our priority is to work within the framework of the treaties," he added "there is no taboo to speak about treaty changes" if necessary.
The comments come before a meeting in Brussels next week in which EU leaders are expected to lay out broad plans to make their economies function better.
Merkel and French President Nicolas Sarkozy wrote a joint letter this week to European Commission President Jose Manuel Barroso calling on Europe to redouble efforts to regulate financial markets and crack down on speculative trading by possibly banning so-called naked short selling across the trade bloc.
Short-selling occurs when traders sell shares or investments they do not own themselves. Merkel and Sarkozy said in the letter, released Wednesday, that "considering recent market developments, we believe there is an urgent need for the Commission to speed up its work to establish stricter control of markets."
Merkel said next week's EU meeting will launch a process that could lead to a permanent institution to deal with competitiveness and stability.
"I think it is necessary that the common European markets, the common issues of the stability and growth pact for all 27 member states are also talked about on the level of heads of government," she said.
Van Rompuy said tighter cooperation is indispensable. "Euro states share the same currency, which requires a high level of coordination," he said.
In separate comments, British Deputy Prime Minister Nick Clegg said after a meeting with German Foreign Minister Guido Westerwelle that all EU governments need to bring "stability and balance to our government finances."
He said Britain's new government would soon initiate an "ambitious plan to bring greater stability in our public finances." Clegg, who was accompanied by British Foreign Minister William Hague, said the British government was convinced of the need for an overhaul of financial market regulation.
"The question is not whether we need to revisit regulation nor whether there is any need for further regulation: We accept that there is," he told reporters. "The question is what kind of regulation and what part of the financial services sector?"
He said regulation should focus on the "over-leveraged unsustainable lending practices in the banking system." Merkel would not comment on whether she expected France to come up with a package of budget cuts, saying each country had to decide on its own how to deal with deficits. "
I believe we all have pledged to adhere to the stability and growth pact again more or less by 2013," Merkel said. The pact calls for countries to keep government debt below 3 percent of GDP.
