Nov. 10 - German and French officials have discussed plans for a radical overhaul of the European Union that would involve a more integrated and potentially smaller euro zone. Andrew Potter reports.
The President of Romania is in Germany. His country is among the newest and smallest members of the European Union. But as a financial crisis sweeps through Europe, could its two biggest economies be preparing to make the euro zone an even more exclusive club? Sources have told Reuters officials from Germany and France have been discussing a bloc using the euro which would be much closer in terms of fiscal policy and tax than the current arrangement. Germany Chancellor Angela Merkel. (SOUNDBITE) (German) GERMAN CHANCELLOR ANGELA MERKEL, SAYING: "Germany has only one goal, that is to bring about a stabilisation of the euro zone in its current form, to make it more competitive. And we believe that this euro zone is able to regain broad confidence, for every single country." A more exclusive euro zone would almost certainly be smaller, meaning struggling economies like Greece would be shown the door. Many EU countries would likely block such a plan. And as it stands their backing would be needed for any changes to EU treaties. Orlando Green from Credit Agricole says there are other hurdles too. (SOUNDBITE) (English) ORLANDO GREEN, ASSISTANT DIRECTOR OF CAPITAL MARKETS STRATEGY, CREDIT AGRICOLE, SAYING: "It's very difficult to make a distinction between the stronger and weaker members, of course from the obvious, but clearly these economies are integrated." Italy moved one step closer to forming a national unity government as it tries to fight a growing economic crisis. Former European Commissioner Mario Monti emerged as favourite to replace Prime Minister Silvio Berlusconi. It's hoped he can lead an emergency government which can swiftly bring in long delayed labour and market reforms. The British Prime Minister says in its current state euro zone leaders must do something. (SOUNDBITE) (English) BRITISH PRIME MINISTER DAVID CAMERON SAYING: "If the leaders of the euro zone want to save their currency then they, together with institutions of the euro zone, must act now. The longer they delay the greater the danger." A feeling certainly shared by France and Germany. The discussions they're having behind closed doors now, could be felt across Europe for decades. Andrew Potter, Reuters