German Chancellor Angela Merkel sought to bury once and for all the idea of common eurozone bonds yesterday (26 June), as Italian Prime Minister Mario Monti repeated calls to use the EU’s bailout funds to ease pressure on Italian debt.
Two days before a crucial European Union summit, European Council President Herman Van Rompuy released a seven-page report on closer fiscal and banking union envisaging a eurozone treasury that would issue common debt in the medium term.
Merkel immediately stamped on the idea of mutualising debt – favoured by France, Italy and Spain – at a meeting of lawmakers from her Free Democratic coalition partners in Berlin, according to people who attended the closed-door session.
“I don’t see total debt liability as long as I live,” she was quoted as saying, a day after branding the idea of euro bonds “economically wrong and counterproductive.
Political tensions were already rising before word emerged of Merkel’s dismissive comments.
Italian Prime Minister Mario Monti told parliament on Tuesday (26 June) he would repeat his call for the European Financial Stability Facility and the European Stability Mechanism, the two funds set up to provide a “firewall” against the spreading debt crisis, to be used to help ease the pressure on Italian debt. (Further reading in EurActiv)
The EU Summit will be very interesting…
PS Should we wish Merkel “Many Happy Returns”? Or just advice her to leave the Euro?