Merkel 'committed' to saving euro

Angela MerkelGerman chancellor Angela Merkel has told Canadians her country is committed to doing everything it can to maintain the euro and renewed her call for fiscal discipline.

Mrs Merkel, who is in Ottawa for two days of meetings with prime minister Stephen Harper, praised Canada for not "living on borrowed money" and said it should serve as a model for Europe.
Last month European Central Bank president Mario Draghi said the bank would do "whatever it takes" to preserve the euro - and markets surged on hopes of action. Spokesmen for Mrs Merkel and Italian premier Mario Monti backed Mr Draghi's comments last month and Mrs Merkel supported them on Thursday.

"What he said is something we repeated time and again since the beginning of the Greek difficulties more than two years ago. We feel committed to do everything we can to maintain the common currency. The European Central Bank, although it is of course independent, is completely in line with what we have said all along," she said at a press conference with Mr Harper.

Mrs Merkel said European leaders were making progress. "We know in the common currency area there has to be more responsibility shared politically. I also underline that in many of these issues we feel we are on the right track, although time is pressing. We are very much aware of this," she said.

Mrs Merkel also lauded Canada for its economic management both in a statement and in person with Mr Harper. "Canada is an example of how one can emerge from the crisis in a robust way," she said. "You have a free trade system, you have sound budgetary policy and you have quite strong rules in the banking system. If you look at the last global economic crisis, Canada has weathered this crisis quite well."

Both leaders share the view that austerity, not more government stimulus, is necessary. Mr Harper, also a conservative, has said that fiscal discipline and economic growth can go hand in hand.

Canadian finance minister Jim Flaherty noted on Wednesday that Canada had halved its deficit since 2009 and was on track for a balanced budget within two years, at a time of relatively modest growth. He said countries could strike a balance where there was modest growth, yet maintain a fiscal track of balanced budgets.

Canada's oil and commodity-rich economy has fared better than other nations in the G7 group in recent years. There was no mortgage meltdown or sub-prime lending crisis in Canada, and its banks are rated among the soundest in the world. Canada did a stimulus in 2009 but is now attempting to balance the budget.

Mrs Merkel and Mr Harper are also discussing Canada's bid for a free trade pact with the European Union. But Mr Harper reiterated Canada's refusal to contribute to a global bailout package for Europe through the International Monetary Fund. Both he and Mrs Merkel said a Canadian free trade deal with the EU was not dependent on Canada supporting a eurozone bailout.

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