November 24, 2011
Never say never: The German government remains officially opposed to controversial euro bonds. Behind the scenes, however, press reports indicate that some within Chancellor Merkel's government have begun discussing the conditions under which they might accept a pooling of euro-zone debt.
Resistance to calls for the introduction of euro bonds appears to be crumbling ever so slightly within the parliamentary groups of German Chancellor Angela Merkel's government, leaving the door open that Berlin may yet shift its position on the highly divisive issue.
Only a day ago, Merkel had described as "extraordinarily distressing" and "inappropriate" a call by the European Commission, the European Union's executive, to introduce so-called " stability bonds." But with pressure mounting across Europe for a strong response to the euro crisis through the introduction of the bonds, newspaper reports in Germany on Thursday indicate that some within the chancellor's Christian Democratic Union (CDU) party -- as well as other conservative lawmakers with the Christian Social Union (CSU), the CDU's Bavarian sister party -- might be willing to give up their objections if certain conditions were met.
Citing conservative parliamentarians, the mass-circulation tabloid Bild reported that scenarios are currently being discussed that could lead to a German agreement on euro bonds. The sources said Berlin may be forced to accept euro bonds in exchange for other European Union countries accepting Berlin's demands for a tightening of the provisions of the euro stability pact.
The Financial Times Deutschland newspaper is also reporting that resistance to euro bonds is diminishing. "We never say never. We only say: No euro bonds under the existing conditions," Norbert Barthle, the budget policy spokesman for the parliamentary group of the CDU and its Bavarian sister party, the Christian Social Union, told the newspaper.
The newspaper also noted that Merkel's criticism of European Commission President José Manuel Barroso's plan had been aimed at the timing of his proposal. Merkel said during a budget debate of the German parliament that the pre-condition would be a change to the EU treaties as well as the introduction of a strict austerity regime.
According to the newspaper, the European Central Bank has also made its first fundamentally positive statement about the prospect of euro bonds. "Even if they are clearly seen as an unrealistic prospect, euro bonds, from the pure perspective of the international monetary system, would be useful as a reserve asset for the world economy," ECB deputy chief Vitor Constancio said on Wednesday.
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