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Editor’s Note: The following report is excerpted from Joseph Farah’s G2 Bulletin, the premium online newsletter published by the founder of WND. Subscriptions are $99 a year or, for monthly trials, just $9.95 per month for credit card users, and provide instant access for the complete reports.

WASHINGTON _ French President Francois Hollande and German Chancellor Angela Merkel are increasing their rhetoric on how to handle the crisis of the euro, according to a report from Joseph Farah’s G2 Bulletin.

The German chancellor wants Brussels, which is the headquarters of the European Union, to have greater power over national budgets in an effort to manage austerity programs of countries which are in economic crisis.

Hollande wants to lessen the burdens on struggling countries that have until now been relegated to severe austerity programs to curtail spending and get their economies back in order.

Demonstrations and violence in some cases have broken out in those countries, particularly in southern Europe such as Greece and Italy, since the austerity programs are exasperating high unemployment rates and pensions are going unpaid, among other issues.

Their positions are so opposite that observers see the French-German relationship deteriorating. That relationship began to fall apart even before Hollande became president of France earlier this year, since Merkel actually came to France to campaign for Hollande’s conservative opponent, Nicolas Sarkozy, who was up for reelection.

Now it’s Hollande’s turn. There is a growing sense that he is secretly giving support to Merkel’s challenger from the Social Democratic Party, former Finance Minister Peer Steinbruck.

Sources say that while Merkel and Sarkozy had their differences, they were able to resolve them before holding any joint summit. That isn’t the case between Hollande and Merkel.

As Der Spiegel recently pointed out, Holland and Merkel’s disagreements spilled over into the open when Hollande “venomously” said that Merkel was “dragging her feet” on European issues because she has her own deadlines in September 2013 when there will be the next federal election in Germany.

She had wanted the German Bundestag, or parliament, to intervene in national budgets. Hollande didn’t.

“We should give Europe real rights of intervention in national budgets,” she told the Bundestag.

Hollande argues that such a transfer of sovereignty rights would require amending European treaties and he also realizes that such an approach requiring approval by the citizens of the countries would not have the vote of French citizens.

So, they met privately looking for common ground but that didn’t happen as both reportedly huffed out of a conference room to a European Council meeting.

Hollande doesn’t want seriously-in-debt countries to bear the economic burden alone. He prefers a shared liability for debts, such as the issuance of euro bonds, a debt repayment fund which Merkel to date has rejected. She prefers strict budget controls despite the recession sweeping across Europe.

The Germans believe Hollande is creating what amounts to a Mediterranean union on Europe’s southern edge, as evidenced by a conference he held in early October with leaders of four southern European and five North African countries in Malta.

It was an idea that Sarkozy once held but Berlin dissuaded him from it. With Hollande reintroducing the idea of a southern axis, it was as regional observers said was like starting all over.

Observers point out that a resolution to the differences that now divide Hollande and Merkel will have to be decided by December. If not, it could intensify the euro crisis even more, resulting in a potential crash of the value of the euro.

However, observers don’t see the differences between Hollande and Merkel ending any time soon. In fact, they say the diversions arising in the Franco-German relation never have been wider.

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