Europe

Europe

Merkel, Barroso stress solidarity to stem crisis

05 October 2011 18:10 (UTC +04:00)

Baku-APA. German Chancellor Angela Merkel and European Commission President Jose Manuel Barroso on Wednesday urged more solidarity and coordination at the EU level amid efforts to contain the worsening debt crisis in the eurozone, APA reports quoting Xinhua.

After Merkel’s short visit to the commission, the heads of the EU’s paymaster and executive arm said in a joint press conference held here on Wednesday that Europe was "at crossroads."

"Germany is in favor of the European Union," Merkel said, adding that Berlin would support the commission’s idea of strengthening the EU and making it more competitive.

Apart from noting Germany’s indispensable contribution to the EU, Barroso kept calling for joint actions and reforms at the press conference.

"Only with coordination at the European level, can we achieve our goals," he said.

While a 24-hour strike staged by civil servants to protest austerity was in full swing on Wednesday in Athens, Merkel insisted that Greece should improve its public finances.

"Greece must remain part of the euro area and get the opportunity to improve its situation," Merkel said, adding that she would meet IMF managing director Christine Lagarde on Thursday.

On Tuesday, eurozone finance ministers had "delayed" the decision of granting another tranche of debt aid to Athens, further increasing the fear of a Greek default on its debt.

Also on Tuesday, Moody’s had downgraded Italy’s government bond ratings with a "negative outlook" and cited "sustained and non-cyclical erosion of confidence," already the second time in merely two weeks that Italy’s debt rating had been slashed.

Merkel also mentioned that European countries could be justified in recapitalizing troubled banks, as France and Belgium had agreed on Tuesday to offer aid to Dexia, the first European bank to be dragged down by the crisis.

"Common guidelines" would be urgently needed on the right amount of capitalization, Merkel added.

The IMF earlier also called on Europe to recapitalize its biggest banks while the shares of the Franco-Belgian bank Dexia shares plunged dramatically on Tuesday.

The two leaders also reached the consensus that the EU should have a strong voice and promote a global financial transaction tax at the upcoming G20 Cannes Summit, without further elaboration at the press conference.