Noonan 'hopeful' of crisis resolution
There have been hopeful signs in the last 48 hours that world leaders were moving towards a resolution of the European situation, Minister for Finance Michael Noonan said today.
The Group of Eight (G8) countries appeared to be responding to demands in Europe for a jobs and growth strategy, he said.
At the G8 summit in Camp David at the weekend, newly elected French president François Hollande said he would present a wide-ranging plan to stimulate growth when he meets his European counterparts for an informal dinner on Wednesday night. “Within this package of proposals there will be eurobonds and I will not be alone in proposing them. I had confirmation on this at the G8,” said Mr Hollande.
Mr Noonan said the priority for European leaders was to develop policy that could be implemented in the short term to add a jobs and growth strategy to the fiscal correction programmes that are taking place in all the countries now.
“It’s not a question of either or, it’s a question of both - a second programme has to be run parallel across Europe and I think that will help very significantly,” he said in Limerick. “But, it seems to me that the signals from the United States were quiet hopeful so, we need to see how they will play out in practise now.”
However, he warned it would be weeks before it was clear what world leaders have in mind, due to French parliamentary elections.
French finance minister Pierre Moscovici said at a news conference with his German counterpart today that jointly issued euro zone bonds were a "strong idea" that should be discussed by leaders at the EU summit.
"We spoke about this, with both confirming a position that is already known," Mr Moscovici told reporters in Berlin after his first meeting with Wolfgang Schäuble since being named finance minister last week. "We will talk about this on Wednesday and each side will put forward its opinions. But for us it's a strong idea," he added.
"The summit on Wednesday only makes sense if everything is on the table."
Germany rules out joint euro bonds in the foreseeable future, saying they could only come after years of closer fiscal integration in Europe.
Asked about France's position on Mr Schäuble heading the Eurogroup forum of euro zone finance ministers, Mr Moscovici declined to comment directly, saying only that this would be part of a "package deal" including other personnel decisions.
At his first EU meeting in Brussels, Mr Hollande will ask German chancellor Angela Merkel to withdraw her veto over eurobonds. The proposal, supported by Ireland, is seen as a potential remedy to the debt debacle as it would provide a common euro zone guarantee to member states when they borrow on the open market.
This would ease the borrowing costs of distressed countries but increase those of strong countries such as Germany, which remains opposed to the notion. However, the French leader believes the time has come to revisit eurobonds.
Amid questions over Greece’s membership of the euro and mounting pressure on Spain’s banks, his decision to push for a change comes as financial markets endure a renewed bout of turmoil.
In spite of German resistance, Mr Hollande has also pledged to reopen the fiscal treaty and empower the European Central Bank to lend directly to governments.
Ahead of the summit, EU leaders are keen to see whether he insists on the insertion of growth measures to the treaty or accepts an alternative that does not involve changing the pact.
Italian technocrat premier Mario Monti is also pushing for eurobonds, saying a concrete growth plan should include “an evolution toward eurobonds”.
In Dublin yesterday, Tánaiste Eamon Gilmore said he expected the talks on Wednesday to focus on growth measures to be advanced at a formal summit next month.
“One of those is the idea of eurobonds, a wider role for the European investment fund, a different approach perhaps to unused structural funds in the EU, a concentration on measures that are required to address youth unemployment in particular . . . and also measures that are required to provide more credit for small and medium-sized businesses,” Mr Gilmore said.
“The fact I think that there is a more receptive audience for those proposals is something that we very much welcome.”
However, the German position remains that eurobonds might be considered only as the end-point in the development of a fiscal union in which all countries adhere to rigorous financial discipline.
This is rooted in concern that any immediate move would play into the hands of fiscally weak governments which are reluctant to put their public finances on a sound footing.
“Without knowing precisely what Mr Hollande is going to say, I don’t see any change in the German position of the last two years,” said a German government source.
Although the source insisted Dr Merkel always sought to promote growth when confronting the debt emergency, Berlin is under pressure to redirect the response to the crisis away from austerity.