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Merkel taps brake as Macron pushes euro zone reform

TALLINN (Reuters) - Angela Merkel cautioned on Friday that euro zone reform should not be the top priority for the European Union, putting a brake on a sweeping programme of European renewal presented to an EU summit by French President Emmanuel Macron.

The German chancellor welcomed the vision that the youthful new French leader set out for leaders over dinner on Thursday, two days after a barnstorming speech at the Sorbonne in which he called for much deeper and faster integration of the bloc after Britain leaves, ranging from joint defence to a shared euro zone budget.

But, facing months of coalition talks in Berlin after she won a fourth term on Sunday on a reduced vote, Merkel told reporters it would take time to persuade sceptical governments of the benefits of deeper ties and there were other priorities -- such as agreeing a new EU asylum policy by the year’s end.

“What I’m concerned about is that we bring as many euro zone members as possible into the discussion,” Merkel said, adding that she would also take future euro zone reform into account in her own coalition talks.

Her likely liberal partners are opposed to Macron’s idea of a substantial common budget, fearful of what they see as spendthrift habits in France and Europe’s south.

Macron said there had been a consensus around his ideas and those of European Commission President Jean-Claude Juncker that the 27 remaining members of the Union should take advantage of a window of opportunity after years of economic and political crisis to reinforce their cooperation as Britain leaves in 2019.

“2018 is a year of opportunities for the European agenda,” he told reporters. It follows elections in France and Germany, the bloc’s leading powers. Macron said outline accords next year would give the European Commission and European Parliament a chance to use new five-year mandates starting in 2019 to make the changes.

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Speaking of a need for a “leap forward”, he said: “We’re all convinced Europe must move ahead faster and stronger.”

But many leaders remained wary of ambitious new projects, doubting the appetite of voters for giving up national control and fearing the continued strength of anti-EU sentiment that is taking Britain out of the bloc and saw the far-right win dozens of seats in the German parliament in Sunday’s election.

Macron voiced satisfaction with summit chair Donald Tusk’s commitment to report back to EU leaders when they meet again in three weeks with proposals for concrete steps to be taken.

However, Tusk himself, a former premier of non-euro zone Poland, referred to a profusion of reform initiatives and added a note of caution, urging a “step-by-step” approach to “real problems”.

He insisted the EU needed to maintain unity in the face of conflicting views about so many new initiatives bubbling up.Merkel spoke privately to Macron and, according to a French aide, welcomed his speech as “visionary” and a return of co-founder France as a driving force in the European Union project.

But she also noted differences and a need to bring other governments -- and other Germans -- on board with the plans.

FILE PHOTO: French President Emmanuel Macron and German Chancellor Angela Merkel attend a news conference following a Franco-German joint cabinet meeting at the Elysee Palace in Paris, France, July 13, 2017. REUTERS/Stephane Mahe /File Photo


Macron also faced a reality check of scepticism from leaders wary of his talk of ambitious “horizons” for the continent. The president of euro zone member Lithuania, Dalia Grybauskaite, tweeted during the dinner: “European horizons drawn. Important to avoid mirages in the desert on the way.”

Dutch Prime Minister Mark Rutte told reporters countries needed first to reform their own economies: “You’re starting with the end point ... There is a discussion about a European finance minister -- but no one has told me what he would do.”

British Prime Minister Theresa May took the opportunity of the summit to visit British troops on a NATO mission in northern Estonia and pledged post-Brexit security cooperation with European neighbours confronting Russian threats.

On Thursday, the chief EU negotiator, Michel Barnier, praised a “new dynamic” to Brexit negotiations created by concessions made by May, although he said progress was still not sufficient to allow discussions on future trade relations.

That message was rammed home by Juncker, Barnier’s boss, who said in Tallinn that it would take “miracles” to have sufficient progress by next month.

Friday’s talks on a “digital agenda” for Europe ranged from cross-border data flows and privacy to cybersecurity and taxing online businesses.

Additional reporting by Julia Fioretti, David Mardiste and Andreas Rinke in Tallinn, Elizabeth Piper in Tapa, Estonia and Alastair Macdonald, Robert-Jan Bartunek, Jan Strupczewski, Foo Yun Chee and Alissa de Carbonnel in Brussels; Writing by Alastair Macdonald; Editing by Jeremy Gaunt