Germany staunch in opposition to eurobonds

AP News
Posted: May 22, 2012 8:33 AM
Germany staunch in opposition to eurobonds

Germany is making clear ahead of a European Union summit that Chancellor Angela Merkel's government remains staunchly opposed to the idea of jointly issued bonds for the 17-nation eurozone.

At Wednesday's informal meeting of the EU's 27 leaders in Brussels, newly elected French President Francois Hollande is expected to push for so-called eurobonds, which can be used to fund investments or boost banks' capital reserves.

But Germany argues they would lessen the pressure on heavily indebted countries such as Greece or Italy to get their finances in order and likely raise borrowing costs for countries in better shape, such as Germany, Europe's biggest economy.

A senior German official stressed that despite the pressure from some other European countries, Merkel's government has not eased its opposition to eurobonds.

"You can wake me up in the middle of the night, at 3 a.m., and then I will tell you what our position is _ also at 5 a.m., it doesn't matter. We think that eurobonds are not the right path for many reasons and in our opinion they cannot be part of a growth strategy," said the official, who briefed reporters on condition of anonymity in line with government policy.

Tackling the debt crisis instead requires work to eliminate the underlying problems by trimming the nations' high debt burden and restoring their competitiveness through structural reforms, he insisted.

France's Hollande has insisted since his election earlier this month that Europe must not only focus on austerity measures to cure southern European nations' financial woes, but also promote growth measures.

German officials have sought to downplay the differences between Paris' new center-left government and Berlin's center-right administration, saying they are confident on reaching an agreement with France on most European issues.

Merkel has spoken increasingly about growth over recent months but argues that it makes no sense to try to achieve it by running up still more debt, and her government instead promotes a better use of existing EU funds and implementation of structural reforms.

"We are pushing for using the existing EU funds in a more targeted manner to foster growth, to restore competitiveness and fight unemployment," the official said.