Divisions ahead of EU summit
German Chancellor Angela Merkel said the situation in Europe was "serious" on the eve of a crucial EU summit, but leaders were determined to take steps to ensure the continued strength of their single currency.
Speaking at the Elysee Palace in Paris ahead of a working dinner with French president Francois Hollande, Ms Merkel said: "We will talk about the political future of the economic and monetary union."
"I say we need more Europe and I think we are in agreement there," she added. "We need a Europe that functions effectively, markets are looking for this, and a Europe where countries help each other."
Ms Merkel said she hoped the summit would produce a pact to boost economic growth in Europe.
Earlier, however, she brushed aside increasingly shrill calls from Spain and Italy for emergency action to lower their soaring borrowing costs.
The president of debt-laden Greece will travel economy class to the summit. A source familiar with the travel plans of the Greek delegation, led by 83-year-old President Karolos Papoulias, said they would travel economy on a regular Aegean Airlines flight to Brussels.
The show of frugality follows a 30-percent pay cut for ministers in the new ruling coalition - a response to public anger over government waste and privilege as ordinary Greeks bear the brunt of punishing cuts demanded by the EU and IMFin exchange for a rescue.The president has already given up his €280,000 salary.
European Union leaders go into the two-day meeting more openly divided than at any time since a still-widening debt crisis erupted in early 2010 after Greece revealed its deficit and debt were far higher than reported.
Addressing parliament in Berlin, Ms Merkel accused top European Union officials of putting the cart before the horse by proposing common euro zone debt before EU controls are in place on national budgets and economic policies.
"I fear that at the summit we will talk too much about all these ideas for joint liability and too little about improved controls and structural measures," she said, renewing her mantra that even Europe's strongest economy must not be overburdened.
Ms Merklel left the door ajar to eventual joint debt issuance but offered no short-term measures to ease the crisis, now in its third year.
But she insisted that Berlin's European partners must first commit to giving EU institutions the power to override their budgets and make them change policy before there could be any shared liability for Europe's debt.
"Joint liability can only happen when sufficient controls are in place," she said in a less definitive rejection of common euro zone bonds than she made behind closed doors yesterday, when she told lawmakers she did not expect to see total shared debt liability in her lifetime.
Rome and Madrid have seen their borrowing costs spiral to a level which for Spain at least would not be sustainable as it battles to recapitalise banks ravaged by a burst property bubble and cut a towering government deficit.