Germany and France ‘discussing’ radical overhaul of EU

A senior EU official told Reuters news agency “intense consultations” had been taking place “at all levels” and that a smaller eurozone was one possibility.

German Chancellor Angela Merkel’s office denied plans to reduce the zone, saying Berlin aimed to “stabilise the eurozone in its entirety”.

But France’s president has talked openly of a “two-speed Europe”.

The BBC’s Europe editor, Gavin Hewitt, says it is now clear the financial crisis in the eurozone is spurring a debate about the future of the bloc.

There are as yet no detailed plans, but the development has prompted a stern warning from European Commission President Jose Manuel Barroso about the dangers of splitting the eurozone, Gavin Hewitt adds.
Ground rules queried

“France and Germany have had intense consultations… over the last months, at all levels,” the unnamed official in Brussels told Reuters.

“We need to move very cautiously, but the truth is that we need to establish exactly the list of those who don’t want to be part of the club and those who simply cannot be part.”

Responding to the Reuters interview on Thursday, Merkel spokesman Steffen Seibert denied proposing a smaller eurozone.

“The German government is most definitely not pursuing such plans,” he said.

“On the contrary, our policies are aimed at stabilising the eurozone in its entirety and attacking the root of its problems.”

On Wednesday, Mrs Merkel told a conference in Berlin that the EU debt crisis should be seen as a chance to make some necessary structural changes.

“The current situation in Europe surely is unpleasant enough to conduct a change for the better,” she said.

“It is time for a breakthrough to a new Europe. A community that says, regardless of what happens in the rest of the world, that it can never again change its ground rules – that community simply can’t survive.”
‘Not an opt-out’

Speaking to students in Strasbourg on Tuesday, French President Nicolas Sarkozy repeated his assertion that allowing Greece to join the euro had been a mistake.

Referring to the further enlargement of the EU, he said: “There are 27 of us.

“Clearly, down the line… there will be 32, 33, 34 of us. No-one thinks that federalism, total integration, will be possible with 33, 34, or 35 states.”

“Clearly,” he added, “there will be a two-speed Europe: one speed that moves toward more integration in the eurozone and one speed for a confederation in the EU.”

Mr Barroso warned on Wednesday about the economic costs of any split in the eurozone and urged Germany to show leadership.

“The euro area is not an opt-out from the EU,” he said in Berlin. “In fact, all the EU should have the euro as its currency.”

UK Deputy Prime Minister Nick Clegg also said a big split in the EU must be avoided while tackling the debt crisis.

In a speech in Brussels, he spoke out against the emergence of a two-speed Europe. The focus, he said, should be on growth and competitiveness.