Leaders in Europe must merge efforts to counter the ill effects of the sovereign debt crisis by establishing a firm political union, German Chancellor Angela Merkel said on Monday.
the leader of the nation hosting the euro zone's largest economy delivered a speech to thousands of delegates in her political party, Christian Democrats. Though the one-hour address did not cite specifics to resolve the crisis, she said the debt scourge presents the most serious threats to Europe since the Second World War.
"The challenge of our generation is to finish what we started in Europe, and that is to bring about, step by step, a political union," the German chancellor told the party congress in Leipzig, an east German city, according to Reuters. "Europe is in one of its toughest, perhaps the toughest hour since World War Two," she said.
Thus far, three nations have received bailouts for their debt-hobbled banks and public finance systems: Ireland, Portugal and Greece, the last of which is waiting on its second bail out in 17 months. Former Greek Prime Minister George Papandreou lasted only half of his four-year term before resigning last week amid troubles caused by the debt scourge, which included bringing the nation to the brink of insolvency. Funds within that second bailout are likely to be used to make payments on the first bailout.
Dangers to the euro zone include a collapse of the euro monetary system, which is likely to happen if a member nation defaults on its loan obligations.
Germany and France, the second-largest economy in the euro zone, hold significant authority given their economic might in the region. Their leaders' speeches often carry lots of weight.
"Irish problems are Slovak problems, Greek problems are Dutch problems, and Spanish problems are our problem," Merkel told her audience on Monday. "Our responsibility does not end at our borders."
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two strains are growing momentum in Europe. Either the European Union will divide into two or development and growth in the region will be used to pay off debt.
The debt scourge permeates the region, which seems to suggest the continent will remain as it is or it will be divided.
The new governments now being formed in Greece and Italy are being crafted with the express purpose of confronting the debt scourge, but their prospects for success remain unclear. Though both nations are led by accomplished economists, how their ideas will play out remains to be seen.
Lucas Papademos, the new prime minister of Greece, conducted conversations with the leaders of Germany and France. The Saturday conversation included the ceremonial congratulations offered by Merkel and Nicolas Sarkozy one day after Papademos took the oath of office.
But then Merkel and Sarkozy started tightening the screws.
Both leaders insisted Papademos follow past agreements that were orchestrated by the Greek leader's predecessor late last month for that second bailout. Papandreou finalized negotiations with additional leaders of Europe for the bailout on October 27 but later openly spoke about leaving the issue up to the Greek people via a referendum. That proved to be the beginning of the end for him, about halfway through his four-year term as prime minister.
The Aegean nation will not be awarded the second bailout since June 2010 until additional steps are followed, according to the office of Sarkozy. Papademos, who was sworn in this past Friday, has said the government he leads plans to execute austerity measures to in order to acquire the bailout funding.
Merkel and Sarkozy, whose adamant defense of the euro is very clear, are fully supporting of the October 27 agreement for Greece.