German business groups back euro bond, Berlin doesn't
BERLIN (Reuters) - Two leading German business groups came out in support of joint euro zone bonds on Monday, raising pressure on Chancellor Angela Merkel to consider bolder crisis steps a day ahead of a meeting with the French president.
The groups' position, contrasting with that of Berlin and Paris which have no immediate plans to discuss the idea, also clashes with another German trade group and some economists who said they too oppose so-called 'euro bonds'.
The split adds another layer of complexity to the debate over how best to tackle the euro zone debt crisis, with the next chapter set to open when Merkel meets President Nicolas Sarkozy in Paris on Tuesday.
The head of Germany's leading export association was the first prominent figure to come out in support of euro area bonds, telling Reuters that without the instruments there was a risk of a worldwide depression resulting from Europe's debt crisis.
"We must show the markets that we are ready to use the appropriate tools, and that means euro bonds signed off by Germany," said BGA President Anton Boerner, whose group's main objective is to ensure the strength of German exports.
"We need euro bonds with strict conditions attached," he added, suggesting no issuance limits and that debt-brake legislation being adopted in Germany should be extended to all euro zone states.
The head of Germany's trade association for small- and mid-sized companies, Mario Ohoven, later also said euro bonds could be introduced, with each country's liability limited in step with the size of their participation.
"Germany then would then have to accept higher interest but would not assume any liability risks," he told Reuters.
Until now, euro bonds have been fiercely opposed by Berlin, which is fearful such a step would push up German borrowing costs and reduce incentives for weaker euro zone states like Greece to reform their economies.
Merkel's spokesman and Sarkozy's office said on Monday they do not plan to discuss common euro zone issuance when they meet, while a German finance ministry spokesman said euro bonds were off the table as long as the fiscal policies of states in the bloc remained the domain of national governments.
Also in the 'no' camp was the German Chambers of Industry and Commerce (DIHK), whose managing director Martin Wansleben told Reuters: "Without a European Federal State, euro bonds make no sense."
"Such a proposal is a fatal move," added Michael Huether, managing director of the Cologne-based IW economic research institute, which has close ties to German employers.
Even if the deepening of the debt crisis -- with big member states like Italy, Spain and to a lesser degree France coming under pressure -- appears to have convinced some Germans to reconsider this hardline stance, top officials continue to rule it out.
German newspaper Die Welt reported at the weekend, citing unnamed sources, that the government was coming around to the idea of euro bonds, but top ministers in Merkel's government say the time is not right to consider such a step.
- Tweet this
- Share this
- Digg this
- Moscow fights back after sanctions; battle rages near Ukraine crash site |
- Argentine markets fall post-default, New York hearing on Friday
- Iraqi Kurds, battling Islamist threat, press Washington for arms
- Israel, Palestinian militant groups agree to three-day Gaza truce |
- Heavy shelling, clashes spread in Libya's Tripoli