Angela Merkel renews position against euro bonds

German Chancellor Angela Merkel attends a media conference at the end of a meeting at Villa Madama on June 22, 2012 in Rome, Italy.

Jeff Horwich: European leaders come together in Brussels tomorrow to allegedly collaborate on the EU's debt problems. But this morning it's shaping up more like a stand-off -- Germany and Italy, in particular, are staking out opposite ends of some key issues.

Stephen Beard joins me now from London. Hello, Stephen.

Stephen Beard: Hello Jeff.

Horwich: So, German Chancellor Angela Merkel is committing herself to a more and more intractable negotiating position. Now she basically said, what -- euro bonds "over my dead body" -- or, something like that?

Beard: Yes, unusually vivid language for a modern German leader. Merkel was speaking to a group of her lawmakers yesterday, and she said: "Euro bonds? Not as long as I live." And one of the lawmakers present shouted: "Then we wish you a very long life!"

Horwich: Why Germany so fearful of euro bonds -- basically using the full credit of Europe to raise money for its struggling members of the EU?

Beard: That's right. I mean, the Germans don't like it because they don't want to sign a blank check for the Greeks, the Spaniards, and the Italians. They know that they are the richest people in the eurozone and they fear that if they join this so-called "debt union," -- if they join in an arrangement standing behind the debts of all the countries -- then they will end up footing the bill if those other weaker countries default.

Horwich: Everybody's throwing up signals -- meanwhile, we've got the Italian prime minister saying basically he will not get up from his seat at the summit until he gets what he wants. How are they going to bridge that gap?

Beard: Well, something must come out of this summit. There will probably be an agreement to allow the bailout fund to buy eurozone government bonds directly, to take some of the pressure off Italy and Spain. But will analysts and market-watchers be impressed?

Here's Simon Tilford of the Centre for European Reform:

Simon Tilford: The question is: will that be enough to reassure investors, to calm the markets? And the answer to that is almost certainly no.

This summit is the 19th eurozone leaders' summit designed to finally crack the debt crisis. Tilford says there will very likely be a 20th, a 21st, a 22nd and 23rd.

Horwich: Stephen Beard live in London. Thank you very much.

Beard: OK Jeff.


About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.


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