REUTERS

PARIS FRANCE said on Tuesday that it would support taking steps towards budgetary integration in Europe, as Berlin wants, but the first priority must be to agree urgent measures to solve the eurozone’s debt crisis.

Following talks in Paris with his German counterpart Michael Link, France’s European Affairs Minister Bernard Cazeneuve said the issues could be worked on in parallel but a fiscal union could not be built until the current crisis has been brought under control.

His comments were the latest sign EU leaders are aiming for an ambitious compromise at a June 28- 29 summit where France and southern eurozone countries would get an agreement from Berlin to a growth pact and a path towards a banking union and euro bonds in return for a commitment to work towards fiscal union.

Separately, a presidential source told Reuters that President Francois Hollande will outline France’s position in a written submission to the European Council in the days ahead.

“We very much wish to continue the political discussion on the process of greater economic and monetary integration and we believe, like our German friends, in the building of a political Europe,” Cazeneuve told reporters, flanked by Link.

“At the same time, what comes out of integration measures cannot constitute the response to the urgency of the crisis we face,” he added. “We continue to say that given the scale of the crisis we need urgent solutions for growth.” Hollande, France’s first Socialist president in 17 years and little known internationally before he won the May 6 election, has come to power as political woes in Greece and Spain’s banking crisis have thrust the eurozone into new turmoil.

His challenge to German Chancellor Angela Merkel’s insistence on austerity-only policies looks set to result in EU leaders agreeing on a pro-growth pact to accompany a budget discipline pact agreed earlier this year.

But calls by Paris and Madrid for a banking union giving a cross-border agency supervisory powers over European lenders and for steps towards mutualised debt have prompted Merkel to demand agreement in return on an eventual fiscal union that would give Brussels more power over budgets.

Hollande is more open to the idea of ceding sovereignty to EU institutions to safeguard the euro than was his conservative predecessor Nicolas Sarkozy, but faces a struggle selling the idea to a public that is angry over economic gloom it increasingly sees resulting from monetary union.