Sunday

24th Jun 2018

Italy sides with Germany against eurobonds

  • Italy was invited to a Merkel-Sarkozy mini-summit for the first time (Photo: Présidence de la République - C.Alix)

At Italy's first invitation for an audience before the Franco-German duo that powers European decision-making, Prime Minister Mario Monti made it clear that he backs the German position on eurobonds.

Meanwhile, little advanced at the meeting of the EU triumvirate, with Germany refusing to discuss whether the European Central Bank (ECB) should intervene more robustly to defend the eurozone.

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"The commission made a lot of proposals yesterday about budget discipline and we largely agree on that," Monti told reporters in Strasbourg after meeting with French leader Nicolas Sarkozy and German Chancellor Angela Merkel, explaining that such a move chips away at policy competition between states.

"I just think that eurobonds, or stability bonds, whatever you want to call them, produce a leveling of the different competitive situations which are expressed via interest rates, which gives the wrong signal, as different interest rates are an indication of where work still needs to be done."

Merkel and Sarkozy have frequently met since the crisis separately from other EU members only to emerge hours later to present their vision for steps that should be taken.

It was the first time an Italian leader had been welcomed into the Franco-German tent, although little emerged on Thursday apart from an announcement from Sarkozy that Paris and Berlin will propose their own modifications to the EU treaties.

"We are working on proposals [for changes] which have advanced a great deal," he said. The proposals are to be presented to the rest of the bloc at its winter summit on 9 December.

Hopes on France's part that the meeting would resolve the core dispute between Paris and Berlin, the role of the European Central Bank in the crisis, were unfulfilled.

The three instead put out a boilerplate statement of their continued support for the bank's independence.

"We all stated our confidence in the European Central Bank and its leaders and stated that in respect of the independence of this essential institution we must refrain from making positive or negative demands of it," the French president said.

"Germany has a history, a tradition and a culture. France has another. We're trying to understand and converge toward the same point ... Ms Merkel explains her worries to me, sometimes at length, and I tell her mine, and then, given the weight of history between our countries, we converge. I try to understand Germany's red lines and France's red lines."

Sarkozy was reportedly "irritated" at Merkel's unwillingness to do discuss the issue, according to Le Monde, the French daily, despite making nice in public.

France had expected the core issue to be placed firmly on the table. The same day, French foreign minister Alain Juppe had said the ECB must become the lender of last resort.

"It's urgent. It will be discussed this very day in Strasbourg," he said on France Inter radio.

For his part, eurosceptic Czech President Vaclav Klaus in a new book on EU integration which he aims to publish in all the main EU languages, has lampooned the Merkel-Sarkozy duo.

"Hardly a week goes by without a Sarkozy-Merkel meeting, in which - for us, but without us - with solemn faces and professionally-trained smiles, they make decisions on the future of our continent," his book said.

ECB will not become bank of last resort, Draghi says

In his first appearance as head of the ECB, Mario Draghi has said the Frankfurt-based bank will not become the lender of last resort for the eurozone. The bank lowered its interest rate by 25 basis points to 1.25 percent.

ECB returns to markets to help Italy and Spain

The European Central Bank has decided buy bonds from troubled eurozone countries after a five-month pause in a bid to stem the crisis from spilling to Italy and Spain.

Merkel outlines steps to 'stability union'

German Chancellor Angela Merkel has called for a "stability union" in which all member states behave in a fiscally responsible manner and miscreants can be brought before the EU’s highest court.

Sarkozy pushes for 'two-speed' Europe

With France's borrowing costs on the up and with its prized triple-A rating under threat, French leader Nicolas Sarkozy is publicly advocating a fast-lane Europe for 'core' euro-countries.

Rehn backs 'smart' mutual debt fund

The idea of mutualising eurozone debt remains as controversial as ever but economic affairs commissioner Olli Rehn has spoken out in favour of a halfway house solution.

Opinion

The risks behind the 'green bond' boom

The EU should not overuse the financial system in order to achieve environmental goals, or it risks the emergence of a green bond bubble which would be detrimental to the financial sector and hinder the achievement of climate targets.

Opinion

Eurozone needs institutional reform

Both the examples of Greece and Italy test the limits of a system with inherent weaknesses that feeds internal gaps, strengthens deficits and debts in the European South, and surpluses in the European North respectively.

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