Strasbourg, 14/12/2010 (Agence Europe) - In the run-up to the December European Council, which is to decide on a limited amendment to the Lisbon Treaty in order to create a permanent financial solidarity mechanism for the eurozone, Europe is divided over the question of means to be made available - Eurobonds in particular - for borrowing initiated in common by several member states to pool risks and prevent the most fragile countries from falling prey to speculation.
Backed by France, the “no” from Germany - which enjoys the lowest bond rates in Europe but which is not willing to pay for the others - voiced against the Eurobonds project launched by the Luxembourg prime minister and president of the eurozone, Jean-Claude Juncker, and the Italian finance minister, Giulio Tremonti, now underpins the work of the European Council which is to meet on 16 and 17 December in Brussels under the leadership of its president, Herman Van Rompuy of Belgium. Nonetheless, although Luxembourg's foreign minister, Jean Asselborn, had given his assurance on Monday evening that this issue would not be covered by the summit at the end of the week, the idea of Eurobonds gave rise to bitter discussion at the European Parliament on Tuesday.
Joseph Daul of France, who heads the EPP Group, deplored the “discord between European leaders” over Eurobonds, a discrepancy that augurs ill for the markets just two days from the summit. “It is the worst possible thing for the euro”, he stressed, admitting: “One must do everything to support the euro but we do not agree on how to do it”. He considered Eurobonds could be a way to respond to the crisis “on condition one says where and how” they are used. In contrast to their conservative colleague, the leaders of the Greens, Social Democrats and Liberals gave their full support to the creation of such financial instruments. Guy Verhofstadt of Belgium, ALDE chairman, said “it is necessary to create a Eurobonds market as quickly as possible”, specifying that Eurobonds would be a way to improve the liquidity of the bond market and to push down the interest rates demanded by creditors. “Our response to the crisis in the eurozone must be complete, coherent and comprehensive. We must not always be on the defensive. The time has come to make a comprehensive package of measures, with the main solution being to address the euro crisis with the creation of an economic, monetary and fiscal union as well as a European Eurobond market. The euro is the only currency with 16 different policies behind it. And one thinks it is sufficient ... It is essential to have unity through solidarity”, the Belgian former prime minister stressed. Calling for them all to stand together as one bloc to stabilise the single currency, the chairman of the S&D, Martin Schulz of Germany, also defended the setting up of Eurobonds, as did the co-chair of the Greens, Daniel Cohn-Bendit of France. “We must define stability and solidarity. Solidarity must help to restore stability and invest in the future. Eurobonds must not only help to stabilise but they must also contribute to ecological transformation and investment in networks. If we show stability and solidarity, then any speculation on member states' debts on the markets will be null and void”, the Green leader underlined. After the fashion of Verhofstadt, Cohn-Bendit nonetheless said he feared the EU might once more make the mistake of falling behind. “We shall have a form of Eurobonds next year but it will be too late”, the leader of the Greens said. “European leaders are not up to it - they are always behind the events”, the former Belgian prime minister had bemoaned earlier.
Giving a “European dimension” to the state lending markets would be a “good idea”, the deputy secretary general and head economist of OECD, Pier Carlo Padoan, said on Monday during the presentation of a critical report on eurozone governance. Although he supported the idea of a common debt market in Europe, Padoan nonetheless did not give any further details. If there is no consensus, the president of the European Commission, José Manuel Barroso, considers it inappropriate to tackle the question of Eurobonds at the European summit. “I do not think there is the slightest possibility of reaching agreement on Eurobonds. Reticence has been shown by several member states. The idea is very attractive but, for now, we have not met the conditions for reaching an agreement”, the head of the European executive arm said, in response to Schulz during a Parliament question time on Tuesday afternoon. “I do not think it is a responsible thing to do at this stage to make official proposals on this subject as the situation is delicate and this would only lead to division within the eurozone and the European Community”, he stressed, answering Verhofstadt. Barroso sounded a note of caution against a negative market reaction if there were too much division in Europe during the European Council. “There is no consensus on this proposal. We must focus on what can help us reach consensus in the eurozone”, Barroso concluded. ECB President Jean-Claude Trichet from France, for his part, reaffirmed his institution's objection to Eurobonds. “In the past, we had told the ECB that we did not consider it fitting to have this kind of bond as governance did not work correctly (…). As things stand, we do not have any new position from the Governing Council”, he said. (E.H./transl.jl)