Merkel: EU should be more independent of IMF

German Chancellor Angela Merkel says she will approach Italy's populist new government with an open mind and try to work with it "instead of speculating about its intentions".

The euro zone needs an intergovernmental European Monetary Fund (EMF) able to give troubled member states shorter-term credit lines if they run into debt problems that threaten the whole bloc, German Chancellor Angela Merkel said in a newspaper interview on Sunday.

In her first detailed response to Emmanuel Macron's euro-zone ideas, the German chancellor blends caution and compromise: Yay to a Euro-IMF and deeper common defense, nay to Italian debt relief. European leaders in Brussels, already anxious about Poland and Hungary, now worry a menace to European unity from inside its core.

"Solidarity between partners should never lead to a union of debt - it must be about helping others to help themselves", she said.

She said she views Macron's idea of a joint intervention force "positively", but that many details would have to be worked out.

Merkel said the initiative "needs to fit into the structure of defense cooperation", which she said should bring down the number of different European Union weapon systems from 180 to "about 30". "Such loans would be spread over 30 years and be conditioned on sweeping structural reforms". "As such, we would be able to take under our wing countries that get into difficulties because of extraordinary circumstances". She also said the EMF would remain under the authority of euro-zone states, in effect giving national parliaments some say over its decisions. But Andrea Nahles, leader of the center-left Social Democrats in the ruling coalition, told the ARD public broadcaster Ms. Merkel's remarks were "very pleasing" with "a totally new tone".

Merkel backed the step-by-step introduction of a euro zone investment budget in the low double-digit billions of euros, saying this could be housed within the European Union budget or outside.

In the interview, Merkel also threw her weight behind a proposal by Macron to create a European military intervention force outside North Atlantic Treaty Organisation. Merkel on Saturday congratulated Italian Prime Minister Giuseppe Conte in a phone call on Saturday and invited him for talks in Berlin, her office said.

Merkel said she was willing to discuss with the new Italian government ways to boost employment rates among young people in Italy.

  • Anthony Vega