France and Germany have agreed to stop arguing in public over whether the European Central Bank should do more to rescue the euro zone from a deepening sovereign debt crisis.
President Nicolas Sarkozy and Chancellor Angela Merkel said after talks with Italian Prime Minister Mario Monti that they trusted the independent central bank and would not touch its inflation-fighting mandate when they propose changes of the EU's treaty to achieve closer fiscal union.
They also demonstrated their backing for Monti, an unelected technocrat, to surmount Italy's daunting economic challenges.
"We all stated our confidence in the ECB and its leaders and stated that in respect of the independence of this essential institution we must refrain from making positive or negative demands of it," Sarkozy told a joint news conference in the eastern French city of Strasbourg.
French ministers have called for the central bank to intervene massively to counter a market stampede out of euro zone government bonds, while Merkel and her ministers have said the EU treaty bars it from acting as a lender of last resort.
Sarkozy said Paris and Berlin would circulate joint proposals before a December 9 EU summit for treaty amendments to entrench tougher budget discipline in the euro area.
Merkel said the proposals for more intrusive powers to enforce EU budget rules, including the right to take delinquent governments to the European Court of Justice, were a first step towards deeper fiscal union.
But she said they would not modify the statute and mission of the central bank, nor soften her opposition to issuing joint euro zone bonds, except perhaps at the end of a long process of fiscal integration.
Some French and EU officials hoped Berlin would soften its resistance to a bigger crisis-fighting role for the ECB after Germany itself suffered a failed bond auction on Wednesday, showing how investors are wary even of Europe's safest haven.
Sarkozy took a step towards Merkel this week by agreeing to amend the treaty to insert powers to override national budgets in euro area states that go off the rails. But there was no sign of a German concession on euro zone bonds or the ECB's role.
"This is not about give and take," Merkel said. Only when European countries reformed their economies and cut their deficits would borrowing costs converge. "To try to achieve this by compulsion would weaken us all."
Italian Prime Minister Monti came under scrutiny in Strasbourg, with euro zone countries anxious to ensure he implements promised reforms to shore up the Italian economy and halt the spread of the crisis. He reaffirmed his promise to balance the Italian budget by 2013, and both Merkel and Sarkozy said they supported him.
