Merkel defies eurozone leaders on reform A sombre Angela Merkel challenged her fellow European leaders on Wednesday to agree more fundamental reforms to enforce the rules of the eurozone, before Germany would be ready to consider any form of joint liability for eurozone debt. The German chancellor rejected short-term crisis remedies as "eyewash and fake solutions," calling instead for tougher European banking supervision, common fiscal policies and structural reforms to boost Europe's global competitiveness. In a statement to the German parliament spelling out her stance for the European summit on Thursday and Friday, Ms Merkel firmly rejected calls for the rapid introduction of jointly guaranteed borrowing in the eurozone as "economically wrong and counter-productive." But she stopped short of repeating the statement attributed to her on Tuesday, when she supposedly told a closed meeting of German MPs that such eurozone bonds would not be introduced "in my lifetime." Parliamentarians who attended the meeting said it sounded more like a throwaway comment than a statement of precise policy. Instead, the chancellor stressed the fundamental need for eurozone members to restore the confidence of the markets by adopting a clear programme of reform to improve competitiveness, encourage growth and enforce the rules of their monetary union. She gave no hint of movement from Berlin to ease the borrowing needs of its eurozone partners in the near future, as Spain and Italy are seeking. "Economic and monetary union must be a stability union," she said. That meant forging agreement on a political union to underpin the currency union with a common fiscal policy, and clear rules of enforcement not merely for budget discipline, but also to narrow the gap in competitiveness between member states. She said political union should be based on four building blocks, involving cross-border banking supervision for "systemically relevant" financial institutions; an integrated fiscal policy; a common commitment to structural reforms to boost competitiveness and growth; and reinforced democratic control in the integrated eurozone. Ms Merkel's determinedly long-term vision was at clear odds with the crisis-fighting rhetoric coming from her principal eurozone partners in Paris, Madrid and Rome. But she made it clear that she did not intend to move on short-term remedies until she was confident of their commitment to more fundamental reforms. "I expect a controversial discussion," she said. Many eyes will be focused on Germany. But she criticised the report to the European Council on long-range reform as putting too much emphasis on shared liability for borrowing, and too little on supervision. "What we need much more (than joint liability) are new rules of enforcement when budget rules are broken," she said. I believe that Eurobonds, or mutualised debt, are the wrong way to go. Ms Merkel promised to challenge her fellow leaders to commit themselves to a new reform agenda, involving changing the EU treaties once more if necessary. She repeated her warning that Germany could be financially overburdened if too many guarantees were expected of it. That would have "unforeseeable consequences for Germany and for Europe." She was speaking after a cabinet meeting that signed off on Germany's own budget for 2013 and spending plans until 2016. The four-year plan would reduce the budget deficit to zero, Wolfgang Schäuble, finance minister, said. The cabinet also agreed to ask the European Commission to draw up plans for a financial transaction tax for at least nine member states of the eurozone. Berlin had hoped to persuade all 27 EU members to agree with such a tax, but fell foul of outright resistance from the UK, as well as some eurozone members including Ireland and the Netherlands.