Merkel hand Macron olive branch on eurozone reforms

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German Chancellor Angela Merkel says she will approach Italy's populist new government with an open mind and try to work with it "instead of speculating about its intentions".

Macron wants to turn Europe's existing bailout fund into a European Monetary Fund (EMF), to act as a buffer in any future financial crises in the bloc, which was almost torn apart in a debt crisis in 2009.

When it comes to assessing Italy's new governing coalition, made up of the anti-establishment 5-Star Movement (M5S) and the far-right League, DW noted that Merkel has remained among the calmer voices.

Reports say a major trading war is brewing between the United States and its closets allies after the imposition of new tariffs which could see USA consumers pay more for everything from canned soup to cars. "Agreeing to a force does not mean we will participate in every military intervention", she said. The EMF would complement other measures to strengthen the euro, including a banking and capital markets union, she said.

Merkel said the initiative "needs to fit into the structure of defense cooperation", which she said should bring down the number of different European Union weapon systems from 180 to "about 30".

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"If the whole euro zone is in danger, the EMF must be able to give long-term credits in order to help countries", Merkel told the Frankfurter Allgemeine Sonntagszeitung.

She proposed offering short-term credit lines to stricken countries, but maintained strict conditions for support: "always subject to special conditions of course, for a limited amount and with complete repayment".

Merkel backed the step-by-step introduction of a euro zone investment budget in the low double-digit billions of euros, saying this could be housed within the European Union budget or outside.

German Chancellor Angela Merkel exchanged views with European Central Bank President Mario Draghi on Monday, her spokesman said, as part of her regular informal meetings with leaders of European institutions.

Merkel congratulated Italian Prime Minister Giuseppe Conte in a phone call on Saturday and invited him for talks in Berlin, her office said.