RE: ....RRRRIIIIIGGGGHHHHHTTTTTMerkel sees EU treaty change as solution, not eurobonds
Mrs Merkel said that treaty changes were an immediate part of solving the crisis
German Chancellor Angela Merkel has said that EU treaty changes rather than eurobonds will help solve the eurozone debt crisis.
Ahead of European Commission proposals for bonds backed byall 17 eurozone states, she said what was really needed was a politicalresponse.
Mrs Merkel argued if there was to be a debate on eurobonds, it should be at the end, not the middle of the crisis.
Germany fears that it would bear much of the cost of jointly backed bonds.
The eurobond plans, due to be presented by the commission onWednesday, are attracting increasing support, despite Germany'sopposition. Greece's new Prime Minister, Lucas Papademos, said onTuesday that eurobonds "or similar tools could provide the means toovercome the crisis".
Addressing Germany's confederation of employers in Berlin onTuesday, the German chancellor said that if changing treaties proved toodifficult on an EU level, they would be dealt with instead by the 17members of the eurozone.
"We have to change the construction of the euro area," shesaid. "Treaty changes are for me an immediate part of solving thecrisis, the political response to a politically derived confidencecrisis."
Reports on Monday suggested that Britain would accept a"narrow" amendment of the EU's Lisbon Treaty covering the eurozone inreturn for a deal on the EU's working time directive.
Leaked document
Although full details of the commission's proposals are notyet known, a leaked draft document indicates they would involve threeoptions
- An extensive scheme that would completely replace national bonds and would require each eurozone government to guarantee the debt of other countries
- A lesser scheme that would see national bonds partially replaced with eurobonds up to a limit that could relate to how closely a country adhered to strict rules.
- The replacement of some national bond issues with a limit on guarantees
Although the prospect of eurobonds has arousedwidespread criticism from German politicians, European Economic andMonetary Affairs Commissioner Olli Rehn said that they would have to beimplemented with very strict rules.
"It is clear that any type of eurobonds would have to go inparallel, hand in hand, with substantially reinforced fiscalsurveillance and policy co-ordination, as an essential counterpart."
But German Finance Minister Wolfgang Schaeuble warned onWednesday that the proposals would not confront the main problem ofrequiring eurozone members to tackle their debts. "As soon as you starttalking about eurobonds... you take away the pressure on thesecountries," he told German radio.
The idea of eurobonds is due to be discussed by the Germanchancellor on Thursday, at a meeting with French President NicolasSarkozy and Italy's new Prime Minister, Mario Monti.