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Germany aims to save eurozone in current form: Merkel

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(BERLIN) - Chancellor Angela Merkel said Thursday that Germany aims to preserve the eurozone as it is, dismissing reports that Berlin was laying the groundwork for a currency union shed of its troublemakers.

"We have a single goal and it is to stabilise the eurozone as it is today, to make it more competitive, to make progress in balancing budgets," she told reporters when asked whether the eurozone must prepare for debt-mired Italy to exit.

"We believe this common euro area is also capable of thoroughly winning back its credibility, that means for every single country," she said after talks with Romanian President Traian Basescu.

"That is the reason we have always said that solidarity with a country is linked to efforts toward budgetary consolidation."

Merkel's comments were a clear declaration that Germany, the paymaster for the eurozone's rescue fund, was not ready to give up on its ailing partners just yet.

However she said a clarification of Rome's political course was "extremely important for Italy's credibility" in the wake of Prime Minister Silvio Berlusconi's announcement he would step aside after economic reforms are adopted.

Merkel also wished a new Greek government "all possible success" in grappling with its own debt drama, which has plunged the eurozone into the worst crisis in its history.

"Germany will do all it can to work as well as possible" with the new administration, after Greek President Carolos Papoulias asked former European Central Bank vice-president Lucas Papademos to form a new government.

Reports earlier said that Germany and France had discussed a possible breakup of the eurozone in the face of the debt crisis roiling global markets.

Germany's Handelsblatt daily said Merkel's ruling CDU party planned to debate a motion next week calling for countries to be allowed to quit the eurozone without necessarily leaving the European Union at the same time.

Merkel's spokesman Steffen Seibert took to microblogging website Twitter to call reports Germany was pursuing plans for a smaller eurozone "false".

"The German government, on the contrary, wants to stabilise the eurozone as a whole," he said.

A French source also dismissed the reports out of hand, saying there were no plans to shrink the ranks of the 17-member eurozone.

And eurozone chief Jean-Claude Juncker called the notion "stupidity" aimed at driving a wedge through the monetary union and added it had "no chance of being realised", while on a visit to Portugal.

Merkel and French President Nicolas Sarkozy said last week that Greece could leave the euro if it failed to abide by the terms of its latest bailout deal.

In light of speculation about a potential breakup of the currency union, European Commission chief Jose Manuel Barroso said in Berlin Wednesday: "The EU as a whole and the euro area belong together and should not be divided."

Sarkozy had spoken Tuesday of a future "two-speed Europe" anchored in a "federal" eurozone, sparking concern of political exclusion among EU members not using the common currency.

British Deputy Prime Minister Nick Clegg said calls to change the EU treaty and reorder the bloc's make-up were "melodramatic" while in Brussels for talks with EU president Herman Van Rompuy ahead of a summit next month looking at a German-led bid to rewrite the EU's rulebook.

Meanwhile German Foreign Minister Guido Westerwelle said EU countries should be able to choose whether to take part in treaty changes on fiscal reform, in light of reluctance among some non-eurozone members.

Merkel told a conference Wednesday the EU was "not viable" without treaty changes that would place stricter controls on public finances, allowing the bloc to become a "stability union."


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