Merkel, Sarkozy positive on common governance, bank tax

The leaders of France and Germany, under pressure to calm the eurozone debt crisis, will float proposals in September for a tax on financial transactions and push for stronger joint economic governance, French President Nicolas Sarkozy said on Tuesday.

After talks in Paris, Sarkozy said he and German Chancellor Angela Merkel were also proposing that all 17 eurozone countries commit to balanced finances and write that goal into their constitutional law by summer 2012.

Among other measures announced, he said they would strengthen the bloc’s economic government via twice-yearly meetings of leaders and the creation of a presidency with a two-and-a-half-year term to steer this forum.

“We want to express our absolute will to defend the euro and assume Germany and France’s particular responsibilities in Europe and to have on all of these subjects a complete unity of views,» Sarkozy told a news conference at his Elysee Palace offices, where he was flanked by Merkel.

“Germany and France feel absolutely obliged to strengthen the euro as our common currency and further develop it. And it

is entirely clear that for this to happen, we need a stronger interplay of financial and economic policy in the euro zone,» Merkel said.

The two are under pressure to come up with plans to shore up the eurozone and restore financial market confidence after a year and a half of turmoil that has refused to die down despite bailouts of Greece, Ireland and Portugal and the creation of an anti-contagion fund.

On the financial transaction tax, Sarkozy said: «The French and German finance ministers will table a joint proposal at the EU level next September for a tax on financial transactions. This is a priority for us.”

Financial markets were closely watching the two leaders’ second bilateral meeting in just over three weeks for any signal of bold steps to restore confidence, and above all any signal they might commit to issuing pan-European government bonds, a move that could make debt more affordable for troubled economies.

In the event that «last resort» of joint bond issuance, as Merkel called it, did not appear to be part of the Paris accord.

“What we are proposing here is the means with which we can solve the crisis right now and win back trust, step by step… I do not think euro bonds will help us in this,» Merkel said.

Sarkozy nevertheless sought to show the two leaders saw eye to eye on the matter.

“We have exactly the same position on euro bonds … Eurobonds can be imagined one day, but at the end of the European integration process not at the beginning,» he said.