Merkel’s visit to Spain

The German Chancellor arrived in Madrid this morning accompanied six German Ministers in order to attend the 23rd bilateral annual summit between Spain and Germany in the Moncloa Palace with the aim of increasing cooperation between the two countries.

Merkel’s first visit will be to the Zarzuela Palace where she will meet the King and the Spanish President, Jose Luis Zapatero. Zapatero will then travel to the Moncloa Palace alone where Merkel will be received with military honours later in the day.

The German Chancellor is accompanied by six members of her cabinet – the Minister for Foreign Affairs, the Minister for the Economy, the Minister for Finance, the Minister for Work and Social Affairs, the Minister for Education and Science and the Minister for Transport and Infrastructure all of whom will be meeting their Spanish counterparts.

During their meeting Zapatero and Merkel will talk about the measures that Eurozone countries are taking to deal with the debt crisis and the possibility of increasing the 750,000 million euro European rescue fund created last May following the collapse of the Greek economy.

Germany is asking all countries in the Eurozone to adopt a series of reforms including limiting budget deficits either by law or constitutionally, delaying the age of retirement and getting rid of clauses which automatically increase pensions and salaries in line with inflation – such as the ones that exist in Spain – and increasing the tax.

According to Merkel these measures are justified in order to increase competitiveness. With regards to increasing salaries the German Chancellor believes that salaries can be raised when profits have been made.

Zapatero agrees with Merkel that it is essential that Eurozone countries take definitive steps especially when it comes to the age of retirement, fiscal harmonization and labour laws.

Zapatero believes that this harmonization is necessary in order to strengthen the Stability Pact, which fixes the budget deficit at 3%, and is as important as the European rescue fund.