Full Letter From Merkozy To Van Rompuy

Tyler Durden's picture

And so the hope that anything real can be done on Friday fades with every confirmation that when it comes to simple math, there is no solution.

Mr President,

To overcome the current crisis, all necessary measures to stabilize the euro area as a whole will have to be taken. We are confident that we will succeed.
We are convinced that we need to reinforce the architecture of Economic and Monetary Union going beyond the indispensable measures which are urgently needed to cope with immediate crisis resolution. Those steps need to be taken now without further delay. We consider this as a matter of necessity, credibility and confidence in the future of Economic and Monetary Union.

The current crisis has uncovered the deficiencies in the construction of EMU mercilessly. We need to remedy those deficiencies. To build a lasting Stability and Growth Union which allows us to preserve our unique European model combining economic success and social responsibility, we have to substantially reinforce the foundations of EMU. Alongside the single currency, a strong economic pillar is indispensable, building on enhanced governance to foster fiscal discipline as well as stronger growth and enhanced competitiveness. In order to achieve these objectives, we need a renewed contract between the Euro area Member States. This conviction is the driving-force behind our proposal.
We need more binding and more ambitious rules and commitments for the Euro area Member States. They should reflect that sharing a single currency means sharing responsibility for the Euro area as a whole. They should pave the way for a new quality of cooperation and integration within the Euro area.
We propose that those new rules and commitments should be enshrined in the European Treaties as. Alternatively , the Member States whose currency is the Euro will have to go ahead. In that case, we would ensure that those Member States willing and able to do so would be able to join and the European institutions would play an important role. We would also work towards bringing this new agreement into the framework of the European Union as soon as possible.
The main building blocks of the new Stability and Growth Union are:

A strengthened institutional architecture

Euro area governance needs to be substantially reinforced. We should provide for a more integrated and more efficient institutional set-up without duplicating existing European structures or institutions. This set-up should be based on:
•    Regular summits – at least twice a year - of the Euro area heads of State and Government with a permanent president. These summits will provide strategic orientations on the economic and fiscal policies in the euro area. The impact of our domestic economic and fiscal policies on the euro area should be considered as a matter of common interest, while safeguarding national responsibility.
•    During the crisis, the Eurosummit should meet on a monthly basis: each meeting should focus on a precise agenda regarding governance and policies to foster growth, competitiveness and fiscal stability. Member States having signed the Euro Plus Pact will be invited to participate to the discussions on issues related to it.
•    A ministerial Eurogroup and a reinforced preparatory structure to prepare and implement the decisions taken by the summit and ensuring the current functioning.
This framework will be fully consistent with the EU institutional architecture. We strongly reaffirm our willingness to fully associate the European Commission. The European Parliament and national Parliaments should also be involved in an adequate way.

A comprehensive framework of prevention

It is undoubtedly in the interest of all members of the Stability and Growth Union to detect and correct departures from sound economic and fiscal policies long before they become a threat to the stability of the Euro area as a whole. Therefore, we need a comprehensive framework on prevention consisting of strengthened co-ordination, surveillance and enforcement as well as positive incentives, building on current arrangements (new macroeconomic imbalances procedure, EU 2020-Strategy, Euro Plus Pact, a greater focus of structural- and cohesion funds on competitiveness etc.) and developing them further.

This framework should comprise in particular:

-    the adoption by each euro area member state of rules on a balanced budget translating the objectives and requirements of the Stability and Growth Pact into national legislation at constitutional or equivalent level. A new legal provison should set minimum requirements for the national rules on balanced budgets. The European Court of Justice, on request of the European Commission or a Euro area Member State, should have the possibility to verify the transposition in the national legislation.

-    Commitment of national Parliaments to take into account recommendations adopted at the European level on the conduct of economic and budgetary policies.

We need to foster growth through greater competitiveness as well as greater convergence of economic policies at least amongst Euro Area Member States. To these aims, building on Article 136 and/or on enhanced cooperation, a  new common legal framework, fully consistent with the internal market, should be established to allowing for faster progress in specific areas such as :
-    Financial regulation;
-    Labor markets;
-    Convergence and harmonisation of corporate tax base and creation of a financial transaction tax;
-    Growth supporting policies and more efficient use of European funds in the euro area.

A reinforced procedure to enforce sound fiscal policies

To complement the preventive arm of the Stability and Growth Pact and in particular the goal to achieve a structurally balanced budget and ex-ante examination of draft budgets, a new procedure should be established to correct breaches of the 3 % deficit of GDP ceiling.

As soon as a Member State is recognized to be in breach with the 3 % ceiling by the European Commission, there should be automatic consequences unless the Eurogroup, acting by qualified majority, decides otherwise. Exceptional circumstances should be taken into account:

-    The obligation for the Member State to conclude with the Commission and approved by the Eurogroup by reversed qualified majority on behalf of the other Member States, a „European Reform Partnership“ specifying the concerned Euro area Member States’ fiscal and structural policy measures to overcome its difficulties and assisting them in those efforts.

-    A sequence of interventions of increasing intensity into Euro area Member States’ rights should be allowed as a focussed response to continued infringement. Steps and sanctions proposed or recommended by the Commission should be adopted by the Council unless a qualified majority of the Euro area Member States decides otherwise.

Buiding on the provisions for a numerical benchmark for debt reduction in the “six-pack” (1/20 rule), the procedure for debt reduction by Euro area Member States with a public debt of more than 60 % of GDP needs to be enshrined in the new treaty provisions.

A permanent crisis resolution mechanism

We will accelerate the setting of the permanent intergovernmental European Stability Mechanism which should be effective in 2012 to better address any future threats to the stability of the Eurozone as a whole, including through the risk of contagion for other Euro area Member States, thus assisting them in situations of emergency.

In order to maximize the efficiency of the ESM and its capacity to take decisions, specific super majority rules (85 % of signed ECB-Capital) should be implemented.

As far as the private-sector involvement is concerned, the ESM treaty should be revised to make clear that Greece required a unique and exceptional solution. We recall that all other Euro area Member States reaffirm their inflexible determination to honour fully their own individual sovereign signature. A recital in the preamble should clarify that the euro area will apply the IMF practice. As agreed, common terms of reference on CACs shall be introduced in national legislations.


On the occasion of the 50th anniversary of the Treaties of Rome we reiterated solemnly together with all Member States of the European Union our resolve to protect the achievements of European unification for the good of future generations. To this end, we committed ourselves to always renewing the political shape of Europe in keeping with the times. It is in this spirit that we submit our proposal to our European partners.
We are convinced that we need to act without delay. We need to take a decision at our next European Council meeting in order to have the new treaty provisions ready by march 2012.

Angela MERKEL                              Nicolas SARKOZY

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Iriestx's picture

TLDR; Bend over, spread your cheeks and give me two good coughs.

Oh regional Indian's picture

TLRS (Too Long, Read Some)...

"We need more binding and more ambitious rules and commitments for the Euro area Member States."

Whoa! That leapt out at me. Regardless of context, look at the underlying iron fist.

Amazing chutzpah, amazing. 



TruthInSunshine's picture

Rest In Pieces, (Jan 4, 1999 - December 7, 2011)


Timmay just sealed the death of the with a wet, sloppy kiss, as only the Jeetner can definitively do, since Timmay has a perfect .000% batting average. From The New York Times (virtuous disseminator of Goebbelfied news): Geithner Sees 'Progress' in Efforts to Shore Up Euro


And then this: 

Germany Doubtful About Euro Meeting 


Wall Street Journal - 1 hour ago A more likely scenario, the official said, is that the 17 euro-zone countries, together with "four or five" other EU countries, would separately agree to ...
Hard1's picture

This letter reads as "We now really need urgently to begin to try to think about how to solve this mess"

And all they can do about it is hold summits to see if someone magically comes with in idea. The proposals of the "architecture" are

-To hold summits twice a year

-To hold monthly summits during the crisis

-To create agroup to implement the ideas from the summits (if any)



TruthInSunshine's picture

They are making a pre-announcement that they are planning on booking a conference room, depending on certain contingencies, to potentially discuss the matter further, at an unspecified, future time.

And they confirmed that this is definitely the case.

Hard1's picture

Maybe they just want to have lots of "working" lunches and dinners at the summits and enjoy the lobster, the steak and the wine

The Big Ching-aso's picture



These are the things they should've figured out from the get go instead of this fly-by-wire-blind BS.    What competent Euro country would sign up to being overseen and governed by a bunch of incompetent arrogant assholes?      They have enough of those types in their own governments as is and they don't need more of the same outside help.

The whole thing is ridiculous.



High Plains Drifter's picture

that is like making hindus , muslims and sikhs , live together in peace.........

CatoTheElder's picture

After reading this letter and finding it extraordinarily lame, I had to check elsewhere to determine whether or not it was a spoof. It is indeed genuine.


Do they really think more rules will fix things? Really? As in the US, the problem is not a paucity of rules and regulations, but enforcement. The problem is rampant, widespread and overt disregard of existing rules and common sense requirements.  And this has been the case since the inception of the Euro. Greece and Italy would not have been admitted but for turning a blind eye to their fiscal profligacy. Without enforcement, rules and regulations - even good rules and regulations with the best of intentions -- are counterproductive.

Do Merkozy really think that markets will find calls for more meetings re-assuring? Van Rompuy may be stupid enough to think so, but Merkel? This letter is just so lame that it's a wonder to me that it was released for publication. Why did they do this?

TheFourthStooge-ing's picture

The endless, self-important verbosity makes me think that they just took a bureaucratese word list and fed it to a perl script.


SirPlayomic's picture

Where's Mr Farage when you need him?


HedgeAccordingly's picture

Not a very sexy open in the CASH -http://hedge.ly/tvh9yw

FL_Conservative's picture

Since when can politicians fix an economic problem?

Iriestx's picture

Since when do they do anything but CAUSE problems?

Sudden Debt's picture




other country's economic problems that is... never at home...

THEY should, THEY must, IF ONLY THEY would.....


hedgeless_horseman's picture



...all necessary measures to stabilize the euro area as a whole will have to be taken.


GeneMarchbanks's picture

I'm still not buying it hh. Stall, then stall some more.

It can't work. A common Treasury here is beyond imagination...

hedgeless_horseman's picture



The current crisis has uncovered the deficiencies in the construction of EMU mercilessly. We need to remedy those deficiencies.

Yes, it is hard for anyone to imagine being sold into slavery, nevertheless, it does occur, sometimes quickly, and sometimes over generations (boiling frogs).

SheepDog-One's picture

So Eurobonds have hit the wall 3 times, so 4th time is the charm?

WonderDawg's picture

What's magic about Eurobonds, anyway? All the underlying countries are on negative credit watch, and likely to be downgraded once we have "official" confirmation of recession in Europe. What would the bonds be rated? AAA? Sure. Why not? Put a guarantee on the box, that'll fool everyone.




knukles's picture

Si senoirgie,
Weza de peeples of ah da European a Union are a gonna seella dese bondies and garantee them with oura countriesa creditees.  So whassa madttah wid a data, a ha?  Esss like a we all guarntees a the whople a thing instead of a dah little bittie teencie tiny a pieces and ah Bingo as a day say atta da old a ladies a homea everybody wins a big.

GeneMarchbanks's picture

Well written letter considering the people who wrote it are, in fact, batshit insane.

Oh regional Indian's picture

Precisely GeneMB. Because they did not write it. :-)


Global Hunter's picture

this line is bat shit crazy "A ministerial Eurogroup and a reinforced preparatory structure to prepare and implement the decisions taken by the summit and ensuring the current functioning."

scatterbrains's picture

ot: anyone else pick up on that SPY close on 11/11/11 ?  That's right bitches   12[6.66]  

TruthInSunshine's picture

11-11-11 is a date which reoccurs every 100 years (every 300 years for it to fall on a Friday), when written in a 2-digit year form.

I want a theory as to why, that fluffs my biases against the cancer and disease that is all things The Bernank.


High Plains Drifter's picture

new treaty by 2012????  wtf?  

SheepDog-One's picture

They dont get it, or are backed into a corner big time...markets do not care about some 'treaty' or other, no markets are starved for more piles of free printed up fiat and demand them delivered NOW!

Sophist Economicus's picture

OMG!   This is a bureuacrat's wet dream.   Frameworks, summits, new rules and regulations, lots of travel, more staff to lord over, businesses to threaten AND lots of 12 year old girls (or boys)....

i-dog's picture

  "We need more binding and more ambitious rules and commitments"

When the previous sets of rules and commitments have been flagrantly broken, just issue more rules and more commitments. Good plan, Fräulein!

These stupid fucks need to be red-carded off the field!

Global Hunter's picture

I really was laughing at the twice a year summits and the monthly euro summits.  I'm not sure how more posing for cameras and talking will fix insolvent but then they're so much smarter than the average man or woman.

I wonder if they know the game is up themselves or whether they're even dumber than that Von Rompuy looks.

Azannoth's picture

"Mr President,.." I stopped there Von Rumpelstiltskin is not an Elected President of anything

tmosley's picture

Are you sure this wasn't written by Ayn Rand?

High Plains Drifter's picture

i think if it was as simple as the eu going bankrupt they would do it and then push the restart button. but they can't . the problem is in the area of 700 trillion in notional derivatives..........

falak pema's picture

words from Merkozy, sticks and stones from the MArket/GS cabal. Iron fist and velvet glove.  Paper, stone, scissor...as BK says so wisely, unfortunately the markets usually have the last word. But is this a real market or is it a command economy bowing to US Oligarchs. Geithner IS in Europe. SO, the iron fist is out there somewhere...whose is it?

BTW : the rumour that no private sector haircuts in Greece is now toast as this confirms current deal for Greece as per previous agreement with 50% private sector haircuts. Tell me if I'm wrong on this!

SheepDog-One's picture

They dont get it....markets do not care about vague promises, markets want piles of free crack cocaine money delivered NOW!

Cangoroo's picture

Not now, yesterday or last week

SheepDog-One's picture

Yea and theyve been promised more free money for 12 months! If a MIRACLE is not performed very soon this whole shit heap is goin down big time! And I dont think they can print, somethings preventing it.

High Plains Drifter's picture

and i think that is exacly what the addict will receive............they have no choice. either they do it or it is game over. perhaps it is still a bit too early with the racalcitrant americans not falling in line like they are supposed to........it is a dirty job. someone has to do it the  world looks at us to do the job i am afraid. the europeans, with their culture of always living under strong governments and having the european mindset of not being free, will do whatever they are told, unless it comes to the point of hunger etc. the wild card in the deck is the americans.  they just are not real sure yet if we will completely go for it all. but we are close and they know we are close, but they need more time, imho. they need more time. so that is why i say they need to continue this financial charade a while longer while they tie up a few loose ends here in the states..........

SheepDog-One's picture

It will have to be a MIRACLE amount, 1 or 2 trillion certainly wont impress anyone...it would have to be $8 trillion, at least...and THEN we're right back to where we are now.

youngman's picture

You are right,....8 trillion now...that just puts out todays fire...and forever in the future as no one will have cut anything....and expenses will skyrocket.....its that decision they have to make..they might want to study the Iceland data today....but they won´t

Sudden Debt's picture




WineSorbet's picture

Your comments and your icon never cease to crack me up.  Thanks!

VisualCSharp's picture


He likes TV. :)

WineSorbet's picture

One currency to rule them all.

Cangoroo's picture

Rejoice and let the printing commence.

spanish inquisition's picture

HAHA.. "the adoption by each euro area member state of rules on a balanced budget" Didn't Goldman already have "workarounds" on this that have already been used for Greece?

Increased financial regulation and a financial transaction tax? Sure, the banks will write it up and that will be in the title line.

reboot this mofo's picture

It's time to arrest these parasitical, murderous, criminal schills posing as leaders of the free world.

Then when we done with them, it's on to the lizards.