Angela we have heard on high

As Italy and Greece implode, and the pressure increases for Germany to do something, anything, Angela Merkel has made a call for ‘structural changes’ in the EU. In other words, in what’s bound to get eurosceptics’ hackles up, she’s pressing for Treaty change and an even more tightly-knit union.

At a conference known as Falling Walls, which commemorates the end of the Berlin Wall, she said:

‘This is the time for a breakthrough to a new Europe. This is a time for a change toward more sustainability. That is the problem we have to contend with in Europe. And that means it is about more than declarations of intent but rather implementing structural changes. The debt crisis is not just something unpleasant, it is a turning point, an opportunity to create something new.’

Quite what Merkel has in mind by ‘something new’ is not clear at this stage, but her most vociferous critics may well be on home turf. Many Germans are deeply unhappy at having to bail out what they view as more profligate nations such as Greece, Spain and Italy, and the Bundestag has proven prickly in the past about approving increases to the euro bailout fund.

Meanwhile, Germany’s top panel of economic advisors – known rather seasonally as the ‘wise men’ – has warned that the ECB risks its credibility by buying the bonds of its indebted neighbours. (They also warn of slowing economic growth, but you don’t really need wise men to predict that.)

More crucially, the panel has proposed the creation of a €2.3 trillion euro fund, a massive gold-backed ‘debt repayment pact’ between euro countries that will help bring outstanding debt to below 60 per cent of GDP.

Merkel, rather paradoxically in a single day, has said the new bailout proposal raises ‘constitutional questions’ and ‘would require a huge number of treaty changes and under these circumstances it wouldn’t be possible.’

Merkel has always had her detractors, but recently some admirers have come out too. Michael Fry of The Scotsman today compared her to Margaret Thatcher. ‘She never really found a mission till the euro crisis broke,’ says Fry, noting with sympathy that ‘her main ally has been the high-heeled popinjay Nicolas Sarkozy of France’.

Love her or hate her, Angela Merkel’s moment may have come.

UPDATE: Reuters is saying that Germany and France are exploring the idea of a ‘core eurozone’.