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Juncker blasts Berlin for 'un-European' behaviour

The Local · 8 Dec 2010, 18:09

Published: 08 Dec 2010 13:34 GMT+01:00
Updated: 08 Dec 2010 18:09 GMT+01:00

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Juncker told German weekly Die Zeit in an interview that Berlin had not even properly looked at his proposal, which was aimed at helping weaker eurozone members raise money, before deciding to oppose it.

"Germany's thinking was a bit simplistic on this," he said. "They are rejecting an idea before studying it. This is very strange. 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," he said.

Merkel responded by urging for "calm" ahead of next Friday's summit of EU leaders, 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.

But Merkel's spokesman accused Juncker of unsettling markets unnecessarily.

"It doesn't help anyone in Europe if European figures call each other un-European," Chancellor Angela Merkel's spokesman Steffen Seibert told 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."

Such collective "E-bonds" could help eurozone members seen by investors as having shaky public finances lower their borrowing costs, since the bonds would be backed by other countries and therefore seen as less risky.

Sky-high interest rates for Irish and Greek bonds contributed to both countries having to go cap-in-hand to the European Union and the International Monetary Fund this year for bailouts worth tens of billions of euros.

Painful yields or interest rates on bonds sold by other members of the 16-nation currency union, including Portugal and Spain, have raised fears that they too will need help.

But at a meeting of eurozone finance ministers this week, Germany was adamant that it thought Juncker's idea, which won backing from Italian Finance

Minister Giulio Tremonti, was not the way forward.

And ahead of a crunch EU summit next week, Germany has also put its foot down over increasing the size of the €750 billion bailout fund operated by the EU and the IMF, despite fears it would be too puny if Spain threw in the towel.

German Chancellor Angela Merkel has said joint eurozone bonds would weaken states' rigour in bringing their finances in order, something she sees as key to preventing another crisis. Spain and the Netherlands are also opposed.

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"Interest rate competition is a way of getting (eurozone members) to stick to stability criteria," Merkel said earlier this week.

Germany, whose finances are seen as so solid that it currently enjoys among the lowest borrowing costs in Europe, fears that joint eurozone bonds could push its bond yields higher.

Berlin also worries that issuing such bonds would be blocked by Germany's highest court for being in breach of the "no-bailout clause" of the European Union's governing treaties.

German Finance Minister Wolfgang Schäuble has said the bonds were impossible "without fundamental changes" to these agreements.


The Local (news@thelocal.de)

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Your comments about this article

15:17 December 8, 2010 by raandy
It depends of which country you are..if you are Italy,,Ireland .Spain,Belgium to name a few it is a super Idea ,but if your the country that ultimately will be left holding all those debts for everyone else who did not get their house in order ,then it is not such a panacea.
15:23 December 8, 2010 by Nobby_T.
@ raandy ... I totally agree with you on this one ... because germany does better than most of the other euro countries we have to pick up their debt so they standing better there ... I don;t think so ... I addmire Chancelore Merkel, she is a good Chancelor, probably one of the best so far, of course she is not perfect, but nobody is ... The other countries should finally learn to bring their house in order, damn it ...
16:30 December 8, 2010 by Kayak
@Randy and Nobby: Please will you both look up the meaning of the word UNION in European Union.
17:15 December 8, 2010 by cheeba
One of the flaws of the currency union in the first place has been the way it lowered the borrowing costs of the PIGGS, enticing them to go on a borrowing and spending orgy. Have no lessons been learned from this?

These people of tiny Luxembourg have grow rich more than anyone else from Brussels pork. It is becoming intolerable, the way they endlessly attempt to hammer everyone else with this "uneuropean" label. Blah Blah Blah
02:32 December 9, 2010 by hanskarl
Amazing, by acting financially responsible Germany is called irresponsible. What? they haven't bailed the rest of Europe out enough? They haven't raised the taxes on the back of every German citizen enough and sent out enough imports and built enough world class businesses that out compete and rack in billions of Euro taxes to fund Europe? Duh!!

The next most responsible thing Germany can do is pull out of the EU.
05:20 December 9, 2010 by anangryman.com
Germany is in the same situation as the US, the only difference is the US is in the same situation as Greece, broke, the US federal reserve is robbing the cookie jar before the US economy collapses. Get out of the Euro zone because this is just the beginning, Germany will have to keep bailing out other economies until you debt is unsustainable, then when your economy collapses the only people that will be laughing will be the bankers, because of all the skimming that was done up to this point.
11:54 December 9, 2010 by raandy
@Kayak,,Union only applies during the smooth times,,NATION INTEREST,applies during the rough times,,what times do you believe the "UNION" is in???
17:51 December 9, 2010 by mixxim
The leader in Berlin was brought up as an 'Ossie' and is therefore exempt from European behaviour. We did not need Wikileaks to tell us she was boring. Germany had its experience of flambouant leaders - AH for example!
06:03 December 10, 2010 by parografik
AH? Really? That was a quick jump, even with the slowing effect of using initials.

The German rates may rise with the creation of these bonds, sure, but sometimes you have to pay for the pavement so that people will buy your cars. As protectionist the mood might be in Deutschland, they have grown rich with benefits of the Union, and will continue to do well, the healthier the economies in the other member countries are.
19:33 December 10, 2010 by PhoenixW2
'Sky-high interest rates for Irish and Greek bonds contributed to both countries having to go cap-in-hand to the European Union and the International Monetary Fund this year for bailouts worth tens of billions of euros.

Berlin also worries that issuing such bonds would be blocked by Germany's highest court for being in breach of the "no-bailout clause" of the European Union's governing treaties.'

This seems rather confused. How could Greece and Ireland have been bailed out, if such action is illegal under EU law?

Plus, Ireland did not go cap-in-hand to the EU. On the contrary the EU went to it and forced them to give up their fiscal sovereignty in return for loans that were not needed, presumably because the EU politicians fear their gravy-train might come off the tracks.
07:48 December 11, 2010 by parografik
@ dude.

I think you missed the point of almost everything I said.

Not sure how what your saying is connected to what I'm saying.

Germany is an export based economy, so a market for German goods needs to be strong enough to pay adequate prices for German goods. Europe is Germany's primary market, no? European markets dry up, Germany suffers, no? Maybe I'm missing something.

Germany has it's share of corruption, even in banking. I helped pay for the bailout of Deutsche bank, so I'm certain of that. Deutsche bank was heavily involved in those crappy Greek, Irish, American mortgages that I wanted nothing to do with in my own home and savings. No way I would have bailed it out at 100cents on a dollar, lucky for you our Fed is just as corrupt as your bankers. Wasn't there a thing on tax cheats in the swiss banks recently? And that Gas pipeline to russia, wasn't that your sitting government who put that crazy handoff of power to Russia together. Weren't they also stockholders? Might not have that one exactly right, but something's rotten in Denmark. Wait, are the PIIGS from Denmark? Not sure who that's supposed to be.

No problem with work ethic, lack of work hours in Germany, early retirement age in Germany, etc. Wish we had that here. I'm trying to convince my insurance company to give me one of those mental health vacations you folks get. Seriously. Germans are doing a lot right here, and we should learn from it in the U.S. I just know if I put those hours in here, I'd be out of business.
13:32 December 11, 2010 by Deutschguy
Merkel's approach is the right one.

Being European is not an all or nothing choice. She acted properly with the reforms required on Greece and Ireland.

Keeping Germany's economy untainted from countries who are not so responsible means that the German electorate is more likely to be supportive of EU goals and benefits. I'm sure the big banks that would profit more EU bond deals are disappointed. That only confirms that Merkel gave the correct response.

Let Luxembourg change its tax system and banking laws as a country to support the PIIGS before Juncker's ideas are considered.
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