Daily News

Merkel considers revenues

But says no to joint liability

- REUTERS

GERMAN Chancellor Angela Merkel accused other European leaders yesterday of wanting to put the cart before the horse by pressing for common bond issuance to fight the euro zone crisis before agreeing to tough new budget controls.

Speaking in the Bundestag lower house of parliament in Berlin before a summit in Brussels today and tomorrow, Merkel left the door open for the first time to using proceeds from a proposed financial transactio­ns tax to boost growth and competitiv­eness in struggling euro countries.

But she offered no other obvious concession­s to government­s in Europe that have pushed Germany to drop its opposition to joint debt liability, and she sharply criticised a report from top EU officials released before the summit that suggested common bonds as a solution to the three-year-old crisis.

“I fear that at the summit we will talk too much about all these ideas for joint liability and too little about improved controls,” Merkel said. “Euro bonds, euro bills, debt redemption funds are not only unconstitu­tional in Germany, but also economical­ly wrong and counterpro­ductive.”

On Tuesday, Merkel told a closed-door party meeting that she did not expect joint euro bonds to be introduced in her lifetime. She made it clear that they could not be considered until euro states agreed to give up control over their national budgets.

“Joint liability can only happen when sufficient controls are in place. I would point out that neither the federal government and states in Germany, nor countries like the US or Canada have total joint debt liability for the bonds they issue.”

As leader of Europe’s biggest economy, Merkel faces enormous pressure to take radical steps to save the single currency bloc from a devastatin­g break-up. Greece, Portugal and Ireland have all been bailed out, and both Spain and Cyprus will soon receive rescues.

Were another big country like Italy to require aid, the bloc’s existing rescue funds would be quickly depleted, stoking fears of a catastroph­ic rupture.

Speaking after Merkel, the parliament­ary leader of the opposition Social Democrats, Frank-Walter Steinmeier, accused her of misdiagnos­ing the crisis and lecturing others “like a schoolmist­ress”.

“The crisis is cutting a swathe through Europe, there is no end in sight, and the crisis is now reaching us,” the former foreign minister said.

Merkel reiterated that Germany could only go so far to save the bloc. If Berlin did too much, it would have “unforeseea­ble consequenc­es” at home and for Europe, she said.

“Germany is an engine for growth and an anchor of stability in Europe. But Germany’s strength is not infinite.”

One area where she did appear to signal a readiness to compromise was on the use of revenues from a proposed financial tax on buying and selling shares, bonds and derivative­s that a group of about 10 euro-zone countries want to introduce next year. Until now, Germany has said the proceeds from such a tax should flow back to the member states where they were raised.

 ?? PICTURE: REUTERS ?? A climate activist wears a mask depicting Germany’s Chancellor Angela Merkel near a banner during a protest in Brussels on Tuesday. The banner reads, ‘Chancellor Merkel, get to work on climate change! 30% CO2 reductions for Europe’.
PICTURE: REUTERS A climate activist wears a mask depicting Germany’s Chancellor Angela Merkel near a banner during a protest in Brussels on Tuesday. The banner reads, ‘Chancellor Merkel, get to work on climate change! 30% CO2 reductions for Europe’.

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