The opinion piece, published in both countries ahead of this weekend's European elections, appears to be a veiled critique of the European Commission, which has been portrayed as being slow to react and sticking too closely to EU rules on budget deficits and free-market competition during the height of last autumn's financial turmoil.
"Faced with the crisis, one should not respond to technical questions but respond to a fundamental question: what economic model do we want?," the two leaders write in Le Journal du Dimanche and Die Welt am Sonntag.
"[Economic] liberalism without rules has failed," they continue, adding: "We need new financial, economic and social rules."
"The model that we want is that of a responsible market economy, which privileges the entrepreneur and the employee over the speculator, the long-term investor over immediate profit."
"We reject a bureaucratic Europe which mechanically applies pernickety rules and is suspicious of change. We want a European Union that listens to its citizens."
French Economy Minister Christine Lagarde echoed this view by calling for the EU's stability and growth pact to be softened. In an interview with FT Deutschland, she urged the development of separate strategies for reducing "structural" and "crisis" deficits.
Protective Europe
"We want a strong Europe that protects us," the leaders write, stressing that this "does not necessarily mean ever-growing competences for the European Union, ever-growing European legislation or ever-growing financial means".
"We want a European Union which encourages research and innovation thanks to a renewed Lisbon Strategy, which encourages economic coordination, which develops true immigration, energy and defence policies and reinforces and modernises its common policies – in particular its agricultural policies."
Green growth
Calling on Europe to take the lead in 'green' job creation, Sarkozy and Merkel insisted that the EU's ambitious climate goals need not negatively impact upon Europe's economic competitiveness.
"Climate protection and competitiveness must go hand-in-hand," they write, warning Europe's international partners that if they refuse to follow in the EU's footsteps, "we are determined to take steps to protect European industry".
Limits to enlargement
Europe needs clearly defined borders and effective institutions if it is to remain at the forefront of world politics, the leaders stress.
"Europe needs borders if it is to be able to act. Unlimited enlargement is not possible," they write, adding: "We need the Lisbon Treaty, because it will make Europe stronger."
They concluded by encouraging all Europeans to head to the polls this week. "There is no better way to support the goal of a stronger Union in a safer world."
