Merkel says top goal is keeping euro zone intact
BERLIN (Reuters) - German Chancellor Angela Merkel rejected Thursday the idea that her government might favor a smaller euro zone, saying her only goal since the beginning of the debt crisis has been to stabilize the bloc in its current form.
Reuters reported Wednesday that some French and German officials were thinking about proceeding with closer economic integration even if that meant doing so with a smaller group of core euro zone countries.
"For months, since the very beginning of the euro debt crisis, Germany has had only one goal, that is to bring about a stabilization of the euro zone in its current form, to make it more competitive, to consolidate budgets," Merkel told a news conference after talks with Romanian President Traian Basescu.
"And we firmly believe that this common euro area is capable of winning back full credibility, including every single country."
Political turmoil and unsustainable borrowing rates in Italy and Greece have raised fears that the currency bloc that was founded in 1999 and enjoyed success in its first decade could break apart, with one or more countries returning to their national currencies.
At a Group of 20 meeting in Cannes last week, Merkel and French President Nicolas Sarkozy broke the euro zone's most sacred taboo and said for the first time that the bloc was prepared to move forward without Greece, if that country put the stability of the broader bloc in danger.
Anger at squabbling politicians in Rome and Athens is building in Germany which, as Europe's largest economy, has shouldered the biggest share of bailouts for Greece, Ireland and Portugal.
A resolution prepared by Merkel's Christian Democrats (CDU) for a party congress in Leipzig next week is expected to state explicitly that members of the euro zone can leave the bloc if they choose to.
"If a member state is consistently unwilling or unable to stick to the rules that come with a common currency, it can voluntarily leave the euro zone without leaving the European Union," a passage in the resolution reads.
The CDU leadership rejected pressure from some members to include a line saying euro member states that violated EU rules could be kicked out. The euro zone crisis will cast a long shadow over the party congress Monday and Tuesday.
After surprise announcements by Bundesbank chief Axel Weber and European Central Bank (ECB) board member Juergen Stark earlier this year that they were stepping down over concerns about the central bank's crisis-fighting policies, Merkel's allies are looking to increase German influence amid fears of a southern European takeover of the ECB.
A separate part of the party resolution that will be unveiled in Leipzig recommends weighting the votes of national central bankers on the ECB's 23-member governing council according to the size of the economies they represent.
Since the birth of the euro, the bank has operated on a one-seat, one-vote basis, a system that gives tiny countries like Malta and Cyprus the same weight as Germany.
At her news conference, Merkel said "time was of the essence" in getting political clarity in Italy, where Prime Minister Silvio Berlusconi has vowed to step down.
She also said Germany stood ready to work with Lucas Papademos, the former ECB vice-president who was named on Thursday to head a crisis government in Greece, which is struggling to avoid a debt default and exit from the euro zone.
President Basescu reaffirmed his country's desire to enter the euro zone despite the turmoil. He said he expected Romania to fulfill the criteria for euro entry by 2015.
"We don't believe in a fragmented Europe," Basescu said. "Germany might survive on its own, but probably no other EU country would make it."
(Reporting by Noah Barkin and Anreas Rinke; Editing by Robert Woodward)