Merkel ally underlines 'no' to eurobonds

21st August 2011, Comments 0 comments

A junior partner in Chancellor Angela Merkel's coalition underlined that Germany would not agree to eurobonds, which would pool the 17 eurozone nations' debt, in an interview to be published Monday.

Horst Seehofer, head of the Christian Social Union, the Bavarian sister party to Merkel's Christian Democrats, told business magazine Wirtschaftswoche that eurobonds would be damaging to the European economy as well as unfair.

"The effect would be debt, inflation and the destruction of economic opportunities," he was quoted as saying.

Seehofer said his CSU would draw a line at attempts to share out Europe's debt burden, which he said would only stoke an "inflationary trend".

"We again turned a blind eye to the ECB buying bonds but that should not be taken as carte blanche," he said, referring to crisis-fighting measures taken by the European Central Bank.

"We will not go along with the next step -- pooling debt. You cannot surmount excessive debt by spreading the burden to all."

French President Nicolas Sarkozy and Merkel said at a summit in Paris Tuesday that eurobonds were not the answer today to the eurozone debt crisis.

But they appeared to leave the back door open to a different policy if circumstances in the eurozone worsen, sparking rumblings of concern in Berlin.

Vice Chancellor Philipp Roesler, the head of pro-business coalition partner the Free Democrats, had earlier ruled out eurobonds as long as his party governs Germany with the conservatives.

Supporters, including Germany's centre-left opposition, say eurobonds are a viable solution to the eurozone's debt crisis.

The strongest states, led by Germany, would underwrite weaker countries which would then find it easier to raise credit on the markets.

Opponents in Germany say it would raise the country's own borrowing costs and remove an incentive for debt-wracked nations to put their own fiscal houses in order.

© 2011 AFP

0 Comments To This Article