UPDATE 1-France wants closer euro zone econ policy -German media

* Econ Min Lagarde proposes econ policy coordination

* Says could coordinate on tax legislation

* Opposes common euro zone bonds for now

(Adds details)

BERLIN, Dec 22 (BestGrowthStock) – France wants all 16 euro zone
governments and any other interested European Union members to
coordinate their economic policy more closely in the future,
Economy Minister Christine Lagarde told a German newspaper.
“The crisis showed us that it is not sufficient to limit
public debt as foreseen in the Maastricht Treaty. Ireland stuck
to these criteria and finds itself nevertheless in difficulty,”
Lagarde said in an interview with the Sueddeutsche Zeitung.

“The EU must not look just at the budgets, it must monitor
how the economies in the member states develop.”

Countries that set out to boost exports and increase
investment in a certain sector, for example, would directly
affect other EU countries.

“I don’t think it is possible to take away sovereignty over
budgets from national states, but we could coordinate with each
other already when we are preparing tax legislation. Germany and
France plan exactly that – more and more we want to coordinate
already when we draft our budget plans for the coming years,”
she explained.

“Furthermore, I can also imagine creating an arbitration
body (for closer economic policy coordination),” Lagarde said.

European countries’ diverging tax rates have become a
subject of tension. In negotiations on Ireland’s EU/IMF bailout
last month, France and Germany wanted Ireland’s ultra-low
corporation tax rate — long seen by higher-tax European
countries as unfair competition — to be addressed but Dublin
made clear the tax rate was non-negotiable.

Lagarde, in the interview, acknowledged that all 27 member
EU states were unlikely to agree to such a wide-ranging move to
coordinate economic policy, with the UK likely to vent fierce
opposition, but she said some countries outside the euro zone
would be interested.

“I doubt that a coordinated economic governance would be
possible with all 27 states. Great Britain, for example,
disagrees entirely on certain things. But that shouldn’t hold up
all the others,” she said.

Lagarde rejected the idea of issuing common euro zone bonds
— which some European policymakers and analysts say would help
ease market concerns about peripheral euro zone debt — at least
until member states have aligned themselves more closely.

“Definitely not at present,” she said, when asked under what
conditions France would support debt jointly issued by all 16
states.

“Before we introduce euro bonds, we first need a [closer]
economic governance,” she said.

She also told the newspaper that the French government was
committed to lowering its debt and was currently planning to
propose a tax reform prior to presidential elections in 2012.
(Reporting by Christiaan Hetzner; Editing by Susan Fenton)

UPDATE 1-France wants closer euro zone econ policy -German media