Sarkozy, Monti warn of threat to Europe

French president Nicholas Sarkozy and Italian premier Mario Monti warned of divisions within the European Union, which could endanger not just the euro currency, but even peace in the continent.

The two leaders met in Paris ahead of talks with their German counterpart, chancellor Angela Merkel, scheduled for today. Reiterating their resolve to work for the future of Europe, they however, appeared to have disagreed on the question of the imposition of a financial transaction tax.

''Italy and France share a perfectly identical view on the future of Europe and the way of resolving the crisis of confidence at the heart of the euro zone,'' Sarkozy told reporters at the Elysee presidential palace, flanked by Monti. ''To face up to this crisis of confidence, all the institutions of Europe must fulfil their responsibilities, as each member state of the zone has been obliged to do.''

Monti said the European Union could not ignore the need to stimulate economic growth, even as it strives to cap public finances. ''The main danger is the birth and development of a basic failure of understanding between populations and member states and the return of prejudices between the north and south of Europe, old and new member states, with the potential for very, very great divisions,'' he added.

France, Germany and Italy – headed by Monti, who took over from Silvio Berlusconi in November – aim to work together to stave off a debt crisis in Europe. ''We do not have the right to drop Europe, we do not have the right to let the euro be destroyed,'' remarked Sarkozy. ''The euro is the heart of Europe. If the euro is destroyed, it's the whole of Europe that goes up in smoke. If Europe goes up in smoke it's the peace of our continent that will one day or another be called into question.''

France has been pushing for the imposition of a financial transaction tax – popularly known as the Tobin Tax, named after James Tobin, an economist and Nobel laureate, who had in 1972 suggested a currency transaction tax – despite opposition from Britain. France is willing to go it alone, even if Germany and other countries do not join it.

While Monti backed France's call for a financial transaction tax, he said Italy was opposed to country's implementing the tax unilaterally.