Hanover, Germany - German Chancellor Angela Merkel and French President Nicolas Sarkozy settled their differences Monday over a proposed Mediterranean Union. The new body, to cultivate closer relations across the sea, would go ahead as a project of the whole 27-nation European Union (EU), the two leaders decided over dinner at a government mansion in Hanover, Germany.
"We are in agreement in principle and in detail," said Merkel after the meeting. "We have done some good work."
Officials said the two leaders would propose at an EU summit next week that the Mediterranean Union be adopted as an extension of an existing EU diplomatic initiative known as the Barcelona Process.
Merkel and Sarkozy had been at odds for weeks over the French-led plan, with the Germans concerned they would be left out.
Sarkozy was paying a flying visit to attend the opening of the March 4-9 CeBIT computing trade fair, where France will this year hold "partner nation" status among 77 countries exhibiting software and digital equipment.
The two leaders' joint appearance at the evening gala had gained in importance after Sarkozy postponed a regular meeting this week with Merkel till June.
Merkel and Sarkozy also agreed to jointly propose EU plans to fight tax havens and to set up a working party to draft proposals on the automobile industry and preventing climate change.
Observers had earlier detected strain in the two leaders' relationship and some media suggested the Franco-German axis had become bogged down.
At CeBIT, Sarkozy defended intervention by Paris to protect big French companies, saying that Germans did not understand France's industrial policy which was only designed to establish European champions.
He hinted that Paris had pressed Washington to make last week's award of a a 35-billion-dollar military contract for flying tankers to EADS, the European aerospace group.
"We told them, we are your friends," he said.
Sarkozy reportedly aims to unveil his Mediterranean grouping at an EU summit on July 13-14 in Paris.
The arrangement it would effectively replace, the Barcelona Process involving 12 non-EU Mediterranean nations, has had a lacklustre history.
