December 1, 2011
German Chancellor Angela Merkel called on the euro zone to accept a strict regimen of legally binding budget discipline, ahead of another European summit next week that many hope will be a turning point in the euro crisis.
Ms. Merkel's first challenge, however, is to overcome her differences about the way forward with French President Nicolas Sarkozy at a meeting in Paris on Monday.
Ms. Merkel is—so far—defying pressure from Mr. Sarkozy to stop the capital flight from euro-zone government bond markets by resorting to radical measures, such as giving a green light to the European Central Bank for massive bond-market intervention.
Instead, the chancellor wants to focus on what she sees as the root causes of the crisis by creating a long-term regime of fiscal discipline, while changing the European Union's treaty to give European authorities new powers of enforcement.
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