LONDON — German Chancellor Angela Merkel warned on Friday that the only real solution to Europe's debt crisis was a drawn-out effort to alter or create new European Union treaties to punish big-spending nations, a process that will take years.
It remained unclear whether Germany, the largest and most economically powerful among the 17 countries that share the euro, would also back short-term action to contain the crisis, including possible dramatic new moves by the European Central Bank. Merkel offered no clarity on market hopes that Berlin would drop its resistance to the ECB deploying more financial firepower if the region's leaders agree to a historic fiscal accord at a summit next week.
Merkel's statements Friday seemed to underscore the gap between Berlin's long-term timeline for a cure for the crisis and the immediacy being demanded by investors. She did call for rapid steps to forge agreements that could, over time, control overspending, but suggested there was no quick fix to the region's debt woes that have already been rattling global markets for two years.
Echoing the words of French President Nicolas Sarkozy on Thursday, Merkel said there was only one real answer to a crisis that is threatening to tear the region's currency union apart. She called for accelerated European integration through a fiscal union, or a pact that could ultimately see nations like Italy, Spain, France and Germany effectively forfeit full independence over national budgets and potentially give their neighbors the right to slap penalties on overspenders. Merkel and Sarkozy are expected to unveil a Franco-German plan for such a pact Monday, ahead of a European leaders summit in Brussels.
GEITHNER TO EUROPE: Treasury Secretary Timothy Geithner will travel to Europe next week for a series of meetings in Germany, France and Italy as leaders pursue a plan to solve the European debt crisis, the Treasury Department announced Friday. Geithner will meet with Mario Draghi, the new head of the European Central Bank, and officials of the German government. He will meet in Paris with Sarkozy and in Italy with new Italian Premier Mario Monti.