EUROPEAN COMMISSION:THE EUROPEAN Commission is preparing plans for the creation of eurobonds, its president, José Manuel Barroso, said yesterday, backing the idea of joint euro zone borrowing despite German opposition.
Seeking to take the initiative amid wild market volatility driven by concerns over a Greek default, Mr Barroso called for much closer political integration and said the EU needed a “new federalist moment” to confront the most serious challenge for the union in a generation.
Addressing the European Parliament in Strasbourg, Mr Barroso portrayed the debt crisis as an existential threat to the European project. “This is a fight for the jobs and prosperity of families in all our member states. This is a fight for the economic and political future of Europe. This is a fight for what Europe represents in the world. This is a fight for European integration itself,” he said.
Mr Barroso confirmed the commission would soon present options for the creation of common euro area bonds – a path opposed by Germany – as a way out of the crisis. Some of these options could be implemented within the terms of the current EU treaty, but others would require changes to the founding charter.
“The only right way to stop the negative cycle and to strengthen the euro is to deepen integration, namely within the euro area,” he said. “This is the way to go. It is also the only way for the euro area to really play the role that investors and global partners expect it to play. What we need now is a new, unifying impulse – a new federalist moment. Let’s not be afraid of the word – a federalist moment is indispensable.”
Germany is opposed to eurobonds, while France, though receptive, believes it should be the culmination of a process of deepening fiscal convergence. Government spokeswoman Valérie Pécresse said yesterday that Paris saw eurobonds as “a point of arrival, not a point of departure.”
A German finance ministry spokesman reaffirmed Berlin’s opposition but said it awaited the proposals, Reuters reported.
While the commission would put forward the eurobond options, Mr Barroso cautioned that this would not bring an immediate solution. Rather, it needed to be one element in a “comprehensive approach to further economic and political integration”.
In a thinly veiled swipe at France and Germany, which have increasingly taken the lead in efforts to staunch the crisis, Mr Barroso said the move towards closer integration must follow the “community method”, where Brussels is centrally involved.
“A system based purely on intergovernmental co-operation has not worked in the past and will not work in the future,” he said.
Meanwhile, the economic and monetary affairs commissioner Olli Rehn said a default by Greece or its exit from the euro zone would cause major damage to the region and the world economy.