Brussels, 14/09/2011 (Agence Europe) - France and Germany oppose the idea of pooling some of eurozone countries' debt in the future. “We are opposed as far as the instrument of eurobonds is concerned because we believe you can't fight debt in Europe by making it easier to take up debt”, said German Foreign Minister Guido Westerwelle on Wednesday 14 September. The emphasis is different in France, where it is suggested that the idea would only work in the longer-term. A spokesperson for the French government, Valérie Pécresse, said that pooling of debt should be the end point rather than a starting point. The French budget minister also said that the setting up of eurobonds could only be the end stage of a process of convergence of eurozone countries' budgets. The financial markets seem to be returning to normal, but Moody's has downgraded the credit ratings of two French banks (Société Générale and Crédit Agricole) because of their exposure to Greek bonds.
In a telephone conversation on Wednesday evening, the chancellor of Germany, Angela Merkel, and the president of France, Nicolas Sarkozy, urged the Greek prime minister, George Papandreou, to introduce all the measures agreed upon in order to meet the budget requirements set out in its three-year austerity programme. This will be a condition for the payment of the next batch of aid, some €8 billion, under the first Greek bailout. On Tuesday, Merkel said that a partial default would not be possible until July 2013, when the European Stability Mechanism (the new bailout fund) comes on stream.
During a debate at the European Parliament, the president of the European Commission, José Manuel Durão Barroso, said he would be setting out options for eurobonds shortly (see separate article). The EU economic and monetary affairs commissioner Olli Rehn warned that the creation of eurobonds would inevitably lead to greater budget surveillance and greater economic coordination.
Concern around the world. The impact of Greece defaulting on its debt is of great concern to Europe's international partners. The US president, Barack Obama, said that Europeans had to meet and decide on a more coordinated integration of their monetary and budget policies, according to reports by Spanish press agency EFE. The US Treasury secretary Tim Geithner, will be attending the meeting of EU finance ministers in Wroc³aw (Poland) on Friday 16 and Saturday 17 September to discuss transatlantic macroeconomic dialogue and examine Europe's actions and international intervention to calm the money markets in order to return to stable, sustainable growth, explained the Polish Presidency in a press release. On CNBC on Wednesday, Geithner said that Europe was capable of solving the debt crisis but would have to do more because it has left it too late. He said it would require eurozone countries to increase their contributions to the bailout fund.
The BRICs (Brazil, Russia, India and China) and South Africa are considering buying up more eurozone country bonds. The Brazilian finance minister, Guido Mantega, said that the eurozone debt crisis would be discussed at the BRICs meeting in Washington, in the United States, next week. (M.B./transl.fl)