BERLIN German Vice Chancellor Philipp Roesler on Saturday called a proposal by the European Commission last week for joint debt issuance "irresponsible" and said Berlin will remain firm in its rejection of euro zone bonds.
Roesler, also Economy Minister, said in a radio interview that European Commission President Jose Manuel Barroso made a mistake last week by suggesting euro zone bonds could be issued once new, intrusive laws to ensure budgets of euro zone countries do not break EU rules are in place.
"I find it irresponsible of Mr. Barroso to re-open this discussion on euro zone bonds again," Roesler told Berlin's InfoRadio network, using language that went beyond Chancellor Angela Merkel's term "extraordinarily inappropriate."
Roesler, leader of the Free Democrats (FDP) junior coalition partners to Merkel's conservatives, said joint bond issues would be wrong for Germany and Europe because they would ease the pressure on indebted countries to reduce their deficits.
He did not mention a main concern in Berlin, that euro zone bonds would raise Germany's borrowing costs.
Germany has benefited from the crisis so far because the flight to quality has allowed it to refinance itself more cheaply. Yields on German bonds, considered the safest in the euro zone, have fallen to record lows in recent months.
"That would wrong for Germany -- which may not necessarily be of interest to him (Barroso)," added Roesler.
"But it would also be wrong for Europe because debts would then be collectivised. The pressure on indebted countries to consolidate their budgets would disappear instantly. In other words, that would in effect block the path towards creating a 'stability union'."
Roesler was echoed on Saturday by Hans Michelbach, a leader in the Christian Social Union in parliament.
"With his unnecessary and unauthorised proposals for euro zone bonds (Barroso) has added to the most recent uncertainty (in markets)," he said.
He said Barroso is raising the false impression that Europe does not have confidence in its own rescue measures.
"With his blathering on about euro zone bonds he's destroying confidence and causing turbulence in markets at a point where we need to see things settle down a bit."
Roesler said Germany sought greater stability with more budget discipline in the euro zone.
"And that's the reason we've got to reject euro zone bonds, and that's what we're all sticking together to do," he said.
Barroso, speaking in Portugal on Friday, said he did not see Germany's position as a major problem. He defended the Commission's proposal on the issue of joint euro bonds as one possible solution to the crisis.
"Germany's position as far as I know, is that euro bonds can be considered when there is greater integration and discipline in the euro zone, so we are not that far apart," Barroso said.
"We thought it was the time to launch the discussion. We, in the Commission, have the duty to launch and propose ideas and afterwards, obviously, it is up to member states to adopt them or not."
Merkel had said this week changing the European treaty to pave the way for closer European integration was vital to solving the debt crisis and restoring investor confidence.
The Commission's proposals are part of the euro zone's response to the sovereign debt crisis, which has now spread to threaten even the large members of the 17-member currency bloc, including Spain, Italy and France, by pushing up their borrowing costs.
The Commission, the executive arm of the 27-member European Union, proposed euro zone governments send draft budgets by mid-October, before they are voted on in national parliaments.
If the draft budgets are not in line with EU budget rules -- the Stability and Growth Pact -- the Commission could ask for changes and defend its position in the country's parliament.
Roesler said firm dismissal of euro zone bonds by Merkel and other German government leaders shows the coalition was determined and united. Asked about the strong language against Barroso's plan, Roesler said:
"It shows not only a high level of nervousness (in Europe) but also how determined and united the German government is. We've got a clear vision for all of Europe: a stability union. That's the goal we're pursuing. And we consider anything that deviates from that aim wrong. And we'll call it wrong, just like we're doing with the question of euro zone bonds."
(Additional reporting by Gernot Heller; Editing by David Cowell)
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