* Merkel speaks in Bundestag a day after being sworn in
* Chancellor says flaws of currency union must be addressed
* Germany pushes for treaty change, binding reform pledges
By Noah Barkin
BERLIN, Dec 18 In the first speech of her third
term, German Chancellor Angela Merkel urged European partners to
tackle flaws in their currency union by ceding control over
economic policy and making politically sensitive changes to the
Speaking in the Bundestag lower house of parliament a day
after her new "grand coalition" government was sworn in, Merkel
said progress in countries like Ireland and Spain showed Europe
was overcoming the financial crisis that nearly tore it apart.
But she said it was too early to declare victory, describing
the 17-member bloc that shares the euro currency as an
unfinished project that could not afford to rest on its laurels.
"I know that pushing through treaty changes in the member
states can be difficult, but if you want more Europe, you have
to be prepared to develop it further," Merkel said.
"In a world that is constantly changing, we can't stand
there and say that at some point we agreed the Lisbon Treaty and
there's no need to change it again. This won't work."
Germany wants closer coordination of economic policy to
complement the bloc's single monetary policy and will push at a
summit of EU leaders this week for members to agree binding
contracts with the European Commission that would oblige them to
take certain economic reform steps.
At the same time, it is pushing for changes to the Lisbon
Treaty to allow for greater European control over policy, a move
that is highly controversial in other members, including
neighbour France, where Merkel will travel later on Wednesday to
meet with French President Francois Hollande.
France is one of a number of countries, including Italy and
Spain, that are pressing Berlin for more "solidarity" in Europe
to combat the economic distress, particularly in the bloc's
southern periphery, that has sent unemployment soaring.
"We have a situation in Europe where Germany is often
accused of blocking certain things. This is not true," Merkel
"If we got a real qualitative leap forward in terms of
binding commitments ... then we could also imagine that new ways
are found to provide those countries that require additional
help to reach their goals with that help."
Merkel praised Ireland and Spain for their economic
progress, and said there were signs of improvement in Greece,
Portugal and Cyprus as well.
"Clearly the euro zone debt crisis is not yet overcome. One
cannot emphasise this often enough. But we are seeing first
successes and we are convinced it can be overcome permanently,"
she said in the Bundestag chamber.