Merkel calls for 'more Europe' as response to crisis

(STRALSUND) - German Chancellor Angela Merkel called Thursday for more powers to be transferred to the European Commission as a response to the debt crisis that threatens to tear apart the eurozone.

Speaking to reporters after a Baltic Sea summit here, Merkel said she shared the opinion of EU President Herman Van Rompuy and European Commission head Jose Manuel Barroso that Europe and the eurozone needed to be "further developed."

"I have always said we need more Europe and that will as a consequence mean that more competences are given to the European Commission," Merkel said.

"Therefore, I expressly welcome that the Commission set out recommendations for the various countries yesterday," she added.

On Thursday, the European Commission pleaded for a tighter eurozone union to avoid "disintegration," a day after it pressed France to respect deficit pledges while offering Spain more breathing space.

Merkel said that the fiscal pact -- a German-led initiative to ensure stricter budgetary discipline in Europe -- was "the first step on the road to integration which must be followed by more steps."

"There are also steps to integration that will require changes to the (EU) treaty. We have not got that far yet, but there should be no taboos," added the chancellor.

EU leaders will gather in Brussels at the end of June to debate plans for an overhaul of the eurozone and the wider EU as a response to the debt crisis that has pitched several of its members into crippling recessions.

"Fiscal consolidation, budgetary discipline, structural reforms and growth all belong together. That was the common view here, which goes also for the EU," she said.

She reiterated Germany's defence of the measures undertaken by Spanish Prime Minister Mariano Rajoy's conservative government to tackle the banking crisis in Spain that has roiled markets in recent weeks.

"The situation in Spanish banks was not caused by the government, nor by budgetary consolidation but was created over years by the build-up of a property bubble," Merkel said.