Chancellor Angela Merkel hardened her resistance to euro-area debt sharing to resolve the region’s financial crisis, setting Germany on a collision course with its allies at a summit of European leaders this week.
Merkel, speaking to a conference in Berlin yesterday as Spain announced it would formally seek aid for its banks, dismissed “euro bonds, euro bills and European deposit insurance with joint liability and much more” as “economically wrong and counterproductive,” saying that they ran against the German constitution.
“It’s not a bold prediction to say that in Brussels most eyes — all eyes — will be on Germany yet again,” Merkel said. “I say quite openly: when I think of the summit on Thursday I’m concerned that once again the discussion will be far too much about all kinds of ideas for joint liability and far too little about improved oversight and structural measures.”
The German chancellor will face an increasingly united bloc of euro-area nations at the summit as fellow leaders in France, Italy and Spain plus investors such as George Soros press her for more ambitious policies to help bring down borrowing costs across the 17-nation euro region. Soros urged Merkel to agree to a fund to buy Italian and Spanish bonds in return for those governments implementing budget cuts, or risk a “fiasco,” Bloomberg reported.
