German Chancellor Angela Merkel has said that the eurozone’s financial problems may be worse than previously thought, calling it Europe’s biggest crisis since the World War Two.
In a one-hour address to her Christian Democrats Party, an uncharacteristically-emotional Merkel offered no new ideas for resolving the crisis that has forced bailouts of Greece, Portugal and Ireland. Instead, she urged her party to set aside misgivings about the sustainability of the euro and to accept closer political integration as a solution for the eurozone’s deepening debt crisis.
The two-day party conference was originally supposed to focus on education policy but Europe's debt crisis has dominated headlines for months and thrust itself into the center of the debate.
Last week alone, the leaders of Greece and Italy were forced out and replaced with technocratic governments tasked with pushing through tough austerity measures.
Italian Prime Minister designate Mario Monti said on Monday that he needs time to implement the spending cuts and economic reforms that parliament approved last week, but urged Italians to prepare for sacrifices.
Merkel does not face an election until 2013, but knows that she too could become a victim of the eurozone turmoil if she puts a foot wrong.
"If the euro fails, then Merkel will fail. That's pretty clear," Juergen Dierks, a 57-year old CDU delegate from Lower Saxony told Reuters.
Asked about Merkel's demand that the party accept "more Europe," Dierks responded: "We all know there is no other choice."
But British Prime Minister David Cameron yesterday rebuffed Merkel’s push for closer political integration, saying “the crisis offers an opportunity for powers to ebb back from Europe to nation states,” a statement underlying Britain’s growing distance from the 17-nation euro area as it seeks to resolve its debt crisis.
Cameron and his ministers have in recent weeks been pushing Merkel and other eurozone leaders to act decisively to contain the crisis.
The EU should be an alliance “that understands and values national identity and sees the diversity of Europe’s nations as source of strength,” Cameron said in a report by Businessweek.
“Change brings opportunities: An opportunity to begin to refashion the EU so it better serves this nation’s interests and the interests of its other 26 nations too; an opportunity, in Britain’s case, for powers to ebb back instead of flow away.”