Fri, Dec 10, 2010 - Page 10 News List

Eurogroup head attacks ‘un-European’ Germany

MARKET JITTERS:German Chancellor Angela Merkel replied to the comments by saying the Eurogroup head should not make remarks that send signals of discord


Eurogroup President Jean-Claude Juncker called Germany’s flat rejection of proposals for joint eurozone bonds “un-European” on Wednesday, prompting accusations from Berlin he was making markets uneasy.

IMF Managing Director Dominique Strauss-Kahn also jumped into the fray, saying the situation in Europe remained troubling and that it faced posting very slow growth if it failed to pull itself together.

Juncker, who chairs meetings of eurozone finance ministers, told German weekly Die Zeit that Berlin had not even properly looked at his proposal, which was aimed at helping weaker eurozone members raise money.

“They are rejecting an idea before studying it ... This way of creating taboo areas in Europe and not dealing with others’ ideas is a very un-European way of dealing with European matters,” said Juncker, who is also Luxembourg’s prime minister.

“It doesn’t help anyone in Europe if European figures call each other un-European,” German Chancellor Angela Merkel’s spokesman Steffen Seibert responded in a regular government briefing. “It is exactly this talking against other people and about other people which should stop, because the markets definitely see this finger-pointing as a sign of discord.”

Merkel herself urged “calm” ahead of summit of EU leaders on Friday next week, where discussions will focus on creating a permanent crisis mechanism for the eurozone and what the chancellor called “narrow” changes to EU treaties.

“I think that we should work in a calm and goal-oriented manner towards what awaits us next Friday. This calm manner is my contribution to making sure we are successful next Friday,” Merkel told reporters.

Such collective “E-bonds” could help eurozone members seen by investors as having shaky public -finances lower their -borrowing costs.

Sky-high interest rates for Irish and Greek bonds contributed to both countries having to seek outside help, and there are fears that other countries like Portugal and Spain might follow suit for the same reason.

However, at a meeting of eurozone finance ministers this week, Germany was adamant that it thought Juncker’s idea was not the way forward.

Germany has also put its foot down over increasing the size of the 750 billion euro (US$998 billion) EU-IMF bailout fund.

Speaking in Geneva, Strauss-Kahn warned that the eurozone risked posting very slow growth.

“The situation in Europe remains troubling, and the future is more uncertain than ever,” Strauss-Kahn said.

“I don’t believe that the euro is in danger,” he told a public forum organized by the UN. “On the other hand, I think that if the eurozone does not pull itself together quickly enough, it would risk having periods of very slow, difficult growth, that it could avoid on condition that its governance is greatly improved.”

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