Angela Merkel can’t seem to catch a break with the media. I guess when you’re the leader of an economic powerhouse like Germany, your works carry some weight. However, the fact is that Germany hasn’t really handled the European Sovereign debt crisis.
The German Chancellor l said on Monday that there was no need at present to increase the eurozone rescue fund, after talks with Polish Prime Minister Donald Tusk.
‘I currently see no need to increase the fund,’ Merkel said of the 750-billion rescue fund to aid struggling eurozone members, adding that Ireland’s recent bailout accounted for ‘a very small percentage’ of the fund.
Last week, EU finance ministers offered Ireland an 85-billion-euro (110-billion-dollar) loan under the temporary rescue mechanism set up following Greece’s debt crisis earlier this year.
Speculation remains rife that Portugal or Spain could be the next eurozone states in need of a bailout.
The chancellor restated her opposition to jointly guaranteed eurobonds, as proposed by European Commission President Jose Manuel Barroso.
Merkel said that, political will aside, she did not think eurobonds were feasible under the current European Union treaties.
‘It is our firm conviction that the contract does not allow for eurobonds, that is uniform between all European member states,’ the chancellor said, adding that would remove an important ‘competitive element’ for member states.
‘Interest rates are an incentive to become better and meet the requirements of the Stability and Growth pact,’ Merkel added.
Her comments came as Luxembourg and Italy argued for the creation of eurobonds to resolve the current debt crisis, in a contribution for the Financial Times
‘Europe must formulate a strong and systemic response to the crisis … This can be achieved by launching E-, or European sovereign bonds,’ Luxembourg premier Jean-Claude Juncker and Minister Giulio Tremonti wrote.
Juncker is the head of the committee of eurozone finance ministers, the eurogroup, which was due to hold its regular monthly meeting in Brussels later on Monday.
A European Union summit is also scheduled for next week, at which EU leaders are due to agree on a permanent eurozone rescue mechanism, to replace the current fund when it expires in 2013.
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