Merkel urges EU treaty changes to combat crisis

Reuters:  German Chancellor Angela Merkel said on Thursday changing the EU's treaties was necessary to combat the euro zone debt crisis.

She argued that alterations could be kept to a minimum, possibly even limited to euro zone members.

Merkel also appealed to non-euro zone members of the 27-member European Union to work with her on deeper integration despite strong opposition from countries such as Britain.

"I am convinced that only political solutions can resolve the situation," Merkel told an industry event in Berlin. "A breakthrough to a new Europe can only happen if we are ready to change our treaties."

She said the changes, opposed by some EU states due to the practical difficulties involved in agreeing and implementing them, could be kept to a minimum.

The EU suffered difficulties in ratifying the Lisbon Treaty which initially stumbled in referendums in several countries.

Merkel said European institutions had to have powers to intervene in national budgets if deficit rules were breached, and that complaints should be brought to the European Court.

"This can be limited to euro states, it can be done in the form of a protocol ... it would be a very limited change to the treaty," said Merkel.

"But national governments must be prepared to tie themselves to the community in a binding way."

Merkel renewed her call for greater EU-wide integration and said a big dose of political sensitivity was needed to ease tensions between euro zone members and states who are part of the EU but not part of the currency union.

"There are ... many good political and economic reasons to further integrate the 27-member EU, as opposed to the 17-member euro zone," she said.

"That there are tensions at the moment, because the non-euro zone members are saying you must tackle the euro's problems and at the same time say 'we don't want to be left behind', requires a great degree of sensitivity. But the German government is prepared for that.

"We want an EU with Britain, with a strong Poland. We invite as many nations as possible to work with us on the euro."

Britain in particular has railed against an EU-wide financial transaction tax which Germany wants. Britain fears such a tax would drive business from the City of London.

British Prime Minister David Cameron, a eurosceptic, visits Merkel in Berlin on Friday.

Merkel again ruled out the possibility of the ECB taking on a bigger role in helping to tackle the crisis.

"If politicians think the ECB can solve the euro crisis, then they are mistaken." She said that even if the ECB assumed a role as lender of last resort, it would not solve the crisis.