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Berlin opens door to bond-buying EU rescue fund
DEREK SCALLY in Berlin
SENIOR BERLIN officials have conceded that Germany is prepared to allow the permanent euro zone rescue fund to buy up sovereign bonds, a move that would shatter a taboo in German relations with the EU.
Almost a year after breaking one German taboo to bail out Greece, Chancellor Angela Merkel opened the door in public yesterday to a position her officials have already conceded in private: a so-called “transfer union” allowing a permanent flow of subsidies from richer to poorer EU member states.
Asked if she supported allowing the European Stability Mechanism (ESM) to buy up sovereign bonds, she said: “I can’t say yes or no, it depends on the construction.”
She insisted the measure cannot be incorporated into the temporary fund (the EFSF) that runs until 2013. “Under no circumstances can we have [bond-buying] under the EFSF . . . But I’d like that things are different in the ESM.”
Officials in Berlin’s ruling coalition say the taboo-breaking decision will have serious political consequences in Germany.
Dr Merkel’s junior coalition partners, the pro-business, liberal Free Democrats (FDP) have always bridled at the idea of a permanent transfer mechanism funded largely by German taxpayers. But in private they have already conceded defeat.
“The game is up, the transfer union is here and the EU will never be the same again,” remarked one senior party adviser who requested anonymity.
Opening the door to sovereign bond purchases is politically sensitive because it breaks a promise made to Germans when they sacrificed the Deutschmark, that adopting the euro would not leave them exposed to bailouts.
That no-bailout promise was reiterated last week in talks between Dr Merkel’s officials and the coalition parliamentary parties, where they set out the government’s negotiating remit for upcoming talks in Brussels.
A joint paper issued after talks states that “the Bundestag expects that . . . programmes to buy up debt will be ruled out”. But an FDP source said the word “expects”, inserted at chancellery insistence, was widely interpreted as “a built-in breach of promise”.
A bond-buying fund would put Dr Merkel on a collision course with her own political allies. Members of her CDU say last week’s agreement “leaves no room for manoeuvre” while its Bavarian sister party, the Christian Social Union (CSU), has already threatened a challenge in the constitutional court.
To avoid breaching no-bailout rules in the European treaties and a potential constitutional challenge, Berlin officials are mulling over an indirect bond acquisition system. One proposal reportedly involves buying from the European Central Bank (ECB) some €77 billion of sovereign bonds it has accumulated and moving them to the ESM.
Ahead of an EU summit to discuss euro zone reform later this month, Berlin officials conceded in private that their much-vaunted competitiveness pact of austerity measures now isn’t worthy of the name. “Europe is heading towards a moment of truth: facing the necessity of a one-off fiscal transfer and accepting that this ultimately is in the German interest,” said Dr Ulrike Guerot, Berlin head of the European Council on Foreign Relations.
On her blog, she wrote the bailout figure under discussion is about 1 per cent of GDP of the Eurogroup.
Opponents of such a sovereign debt transfer mechanism in Germany have conceded it now seems inevitable.
“Transfer union means that German taxpayers give money for other countries and economies to continue living beyond their means,” said Prof Lüder Gerken, head of the Centre for European Policy in Freiburg. “This is impossible to sell in public so I predict that the result will be prettied up so that people don’t realise what’s happened.”
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Un interessato commento dell'Irish Times.
DEREK SCALLY in Berlin
SENIOR BERLIN officials have conceded that Germany is prepared to allow the permanent euro zone rescue fund to buy up sovereign bonds, a move that would shatter a taboo in German relations with the EU.
Almost a year after breaking one German taboo to bail out Greece, Chancellor Angela Merkel opened the door in public yesterday to a position her officials have already conceded in private: a so-called “transfer union” allowing a permanent flow of subsidies from richer to poorer EU member states.
Asked if she supported allowing the European Stability Mechanism (ESM) to buy up sovereign bonds, she said: “I can’t say yes or no, it depends on the construction.”
She insisted the measure cannot be incorporated into the temporary fund (the EFSF) that runs until 2013. “Under no circumstances can we have [bond-buying] under the EFSF . . . But I’d like that things are different in the ESM.”
Officials in Berlin’s ruling coalition say the taboo-breaking decision will have serious political consequences in Germany.
Dr Merkel’s junior coalition partners, the pro-business, liberal Free Democrats (FDP) have always bridled at the idea of a permanent transfer mechanism funded largely by German taxpayers. But in private they have already conceded defeat.
“The game is up, the transfer union is here and the EU will never be the same again,” remarked one senior party adviser who requested anonymity.
Opening the door to sovereign bond purchases is politically sensitive because it breaks a promise made to Germans when they sacrificed the Deutschmark, that adopting the euro would not leave them exposed to bailouts.
That no-bailout promise was reiterated last week in talks between Dr Merkel’s officials and the coalition parliamentary parties, where they set out the government’s negotiating remit for upcoming talks in Brussels.
A joint paper issued after talks states that “the Bundestag expects that . . . programmes to buy up debt will be ruled out”. But an FDP source said the word “expects”, inserted at chancellery insistence, was widely interpreted as “a built-in breach of promise”.
A bond-buying fund would put Dr Merkel on a collision course with her own political allies. Members of her CDU say last week’s agreement “leaves no room for manoeuvre” while its Bavarian sister party, the Christian Social Union (CSU), has already threatened a challenge in the constitutional court.
To avoid breaching no-bailout rules in the European treaties and a potential constitutional challenge, Berlin officials are mulling over an indirect bond acquisition system. One proposal reportedly involves buying from the European Central Bank (ECB) some €77 billion of sovereign bonds it has accumulated and moving them to the ESM.
Ahead of an EU summit to discuss euro zone reform later this month, Berlin officials conceded in private that their much-vaunted competitiveness pact of austerity measures now isn’t worthy of the name. “Europe is heading towards a moment of truth: facing the necessity of a one-off fiscal transfer and accepting that this ultimately is in the German interest,” said Dr Ulrike Guerot, Berlin head of the European Council on Foreign Relations.
On her blog, she wrote the bailout figure under discussion is about 1 per cent of GDP of the Eurogroup.
Opponents of such a sovereign debt transfer mechanism in Germany have conceded it now seems inevitable.
“Transfer union means that German taxpayers give money for other countries and economies to continue living beyond their means,” said Prof Lüder Gerken, head of the Centre for European Policy in Freiburg. “This is impossible to sell in public so I predict that the result will be prettied up so that people don’t realise what’s happened.”
***
Un interessato commento dell'Irish Times.
Ultima modifica:
.. e poi, con la tripla pazienza, molte cose diventano possibili, anche portarli a 100 
.