German Chancellor Angela Merkel and Italian Prime Minister Matteo Renzi attempted to find common ground Friday on the refugee crisis, in a bid to ease tensions between the two European states.

Renzi has emerged as a major critic of the Europe Union's handling of the region's banking sector and its tough fiscal policy, as well as claiming that Germany plays a too-dominant role in European affairs.

At a joint press following talks in Berlin, they said that they had agreed that the refugee crisis needed to be tackled at its source.

Merkel said the two nations planned to step up the fight against human traffickers, including by establishing a joint training mission in Tunisia to help strengthen Libyan security forces.

Both countries have "maximum interest" to boost Libya's state structures and security forces in order to combat illegal immigration, Merkel said.

Italy is a frequent first destination for refugees and migrants fleeing conflict or economic deprivation.

But Renzi also made it clear that differences remained between the two nations as he attempts to carve out a larger role for Italy in European affairs. "Of course, we don't agree on everything," the Italian leader said.

Italy has come under fire from Brussels for blocking the 3 billion euros (3.26 billion dollars) in aid the EU has agreed to pay Ankara to help accommodate the refugees housed in Turkey so as to stem the flow of asylum seekers to Europe.

Speaking on Friday, Renzi called on Brussels to address Italian concerns about the aid to Turkey by next Thursday's more-than 70-nation Syrian Donors Conference in London.

This includes whether the funds will be paid out of the EU budget or whether the cost will be shared among member states.

"Italy has said 'yes' to the contribution," Renzi said. "We have not changed our mind, [but] we are waiting for our friends in the [EU] Commission and the European Union to answer some questions ... I hope before the London conference."

Finalizing the aid deal with Turkey is also crucial for Merkel's push for an international solution to the influx of refugees, and to head off pressure for her to secure national borders and impose a limit on the asylum seekers entering Germany, which topped 1 million last year.

She pledged again on Friday to ensure there is "marked and sustained reduction" in the numbers of refugees this year, with her government having already tightened up asylum laws and taken measures to increase deportations of those not eligible to stay in Germany.

Friday's talks with Renzi come as part of the build up to the EU leaders' summits in Brussels in February and March, when Merkel hopes to secure backing for her drive to share the refugee burden EU across member states.

The chancellor is set to meet next week Portugal's new Socialist Prime Minister Antonio Costa, who also wants to roll back tough fiscal austerity, which has been a feature of Portugal's economic life in recent years as it battled to emerge from the debt crisis.

Renzi said he hoped that Italy and Germany, as two founding EU members, could agree on strong actions to push the bloc "in a completely different direction from what we have seen in the last period.”

He also urged Merkel to sanction a softening of austerity policies to stimulate economic growth in the 28-member Brussels-based bloc.

Italy wants "a Europe of values and ideals, not just of clauses and bureaucracies," he said.

Renzi argued that a more flexible approach to fiscal policy could stop the rise of populist political parties, amid rising support for far-right parties in France and in other parts of Europe.

Indeed, a tougher stance on Europe also helps Renzi to head off the domestic political threat posed by Italian anti-European and populist political movements.

"We both believe that fighting unemployment in Europe means fighting against populism,” Renzi said standing alongside Merkel.

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