EUROPEAN UNION | 14.09.2011

EU Commission bucks German opposition and backs 'eurobonds'

 

Pooling bonds could help Europe's debt crisis

The head of the European Commission, Jose Manuel Barroso, has put his support behind the idea of a common bond for the eurozone. Approval for the bonds depends on Germany, which staunchly opposes the idea.

 

The President of the European Commission, Jose Manuel Barroso, lent his support to the idea of common eurozone bonds on Wednesday during an address to the European Parliament.

Barroso said the European Commission would soon be presenting options to introduce the eurozone bonds. This is despite Germany's stated opposition to the bonds. In order for the bonds to actually be implemented, Germany would need to sign off on the plan.

Speaking to the European Parliament in Strasbourg, France, Barroso called the debt crisis in the eurozone "the most serious challenge of a generation."

He also cautioned that while eurobonds - loans with common interest rates across the eurozone - would help ease the debt crisis, they would only be part "a comprehensive approach to further economic and political integration."

Barroso's comments had a positive effect on European markets, as stocks edged higher and the euro gained strength against the dollar.Barroso comments had a positive effect on markets

'Difficult truths'

World Bank chief Robert Zoellick, meanwhile, criticized the 17-members of the eurozone for doing too little, too late to combat the grinding debt crisis.

"The global economy has entered a new danger zone with little running room as European countries resist difficult truths about the common responsibilities of a common currency," Zoellick said.

The World Bank chief, who also called on the US and Japan to stop "muddling through" their economic problems, said Europe needed to either speed up political and economic integration or face the consequences.

"It is not responsible for the eurozone to pledge fealty to a monetary union without facing up to either a fiscal union that would make monetary union workable or accepting the consequences for uncompetitive, debt-burdened members," Zoellick said.

'Greece's future in eurozone'

Later on Wednesday, German Chancellor Angela Merkel held a conference call with French President Nicolas Sarkozy and Greek Prime Minister George Papandreou.

During the call, Papandreou reassured Merkel and Sarkozy that Greece would strictly adhere to its promises to enforce austerity measures and hit fiscal targets.

Merkel's spokesman, Steffen Seibert, said after the conference call that "the chancellor and president were convinced that Greece's future lies in the eurozone."

There has been speculation that should Greece fail to get its debt problems under control, it could mean the country's dismissal from the eurozone.

Author: Matt Zuvela, Spencer Kimball (AFP, AP, Reuters, dpa)
Editor: Andreas Illmer

 

 

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