Saturday

28th Jan 2023

Hollande to confront Merkel on eurobonds at EU summit

  • Hollande (l) at the G8 summit in Camp David: 'We have to do it with everybody that counts in Europe, Germany naturally' (Photo: The White House)

French leader Francois Hollande has said he will call for the creation of joint eurozone debt at Wednesday's (23 May) snap EU summit in Brussels despite German hostility to the idea.

Speaking to press after the G8 meeting in Camp David, Maryland, on Saturday, he said: "Within this package of proposals there will be eurobonds and I will not be alone in proposing them. I had confirmation on this at the G8."

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He added on Germany's antipathy toward the plan: "There's no reason to think any country [is] isolated ... If we want to move forward we have to do it with everybody that counts in Europe, Germany naturally, but also the rest of the world."

German leader Angela Merkel has in the past said eurobonds could fly but only after the single currency area implements new fiscal discipline rules and emerges from the crisis.

The joint-debt initiative would see Germany pay more to borrow money so that weaker euro economies could pay less in a move unpopular with German voters.

But France, Italy and Spain - as well as the European Commission and smaller euro-using countries such as Ireland - believe the eurozone should take the step now to restore market confidence.

Merkel over the weekend also took a bashing from Alexis Tspiras, the leader of the Greek far-left anti-bail-out party, Syriza.

The 37-year-old politician - tipped by some pollsters to win Greek elections in June - told Reuters that Merkel's vision of a pro-austerity eurozone governed by EU institutions in Brussels has no popular mandate.

He said: "Merkel is isolated ... Mrs Merkel needs to understand that she does not hold the keys to the door of the euro zone which she can open and close whenever she chooses. There are no owners and tenants in the euro zone."

He added on joint eurozone governance: "It is derogatory and undignified for a prime minister or a finance minister to negotiate with a second class employee of the European Commission or the European Central Bank. Negotiation should be at a political and bilateral level."

Tspiras met with left-wing politicians in Paris on Monday and will repeat the exercise in Berlin on Tuesday but has left out Brussels from his pre-election tour.

The prospect of a Greek euro exit, and its potential to prompt a market stampede on Spain, threatening the survival of the euro itself, dominated the G8 summit and cast a shadow over a back-to-back Nato chiefs' meeting, also in the US, on Sunday.

UK leader David Cameron told press in his pre-Nato-summit briefing in Chicago that if Greece elects Tspiras it will effectively chose to leave the euro.

"They can vote to stay in the euro-zone and meet their commitments, or they can vote to give up on their commitments and, in effect, give up on the eurozone," he said.

Brussels sees no serious opposition to eurobonds

The European Commission has launched a polemic on eurobonds - a proposal that eurozone countries should guarantee one another's debt, taking member states into uncharted territory in terms of solidarity and trust.

Commission fast-tracks EU 'project bonds' to spur growth

The EU commission on Wednesday proposed that "project bonds" worth €230 million be kicked off next year instead of 2014, so as to help investments in transport, energy and broadband connections as national budgets are drained of cash.

Merkel and Hollande want Greece to stay in euro

France's newly elected president and the German Chancellor have said they want Greece to remain in the eurozone. But the IMF says an "orderly exit" is a real option.

EU commission to outline plans for political union

The European Commission has said it will soon bring forward plans for an economic and political union it says is necessary for the creation of eurobonds - currently the subject of heated exchange between Berlin and Paris.

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