ORIGINAL FRENCH ARTICLE: Le forcing pour les « eurobonds »
by Pierre Ivorra
Translated Saturday 27 August 2011, by Henry Crapoand reviewed by
The partisans of eurobonds increase their pressure on the occasion of the August 16 meeting at the French presidential palace.
The idea of being able to issue government bonds guaranteed by the countries of the euro zone in place of the bonds issued by each national government is being put forward actively as one of the cards to be played in the euro crisis. The proposal is notably defended by Jean-Claude Juncker of Luxemburg, the president of the Eurogroup, and Berlusconi’s finance minister, Giulio Tremonti. Part of the bonds issued by each of the euro zone countries would be included (between 40% and 60%). The promoters of these eurobonds state that by combining the loans of Germany and of Italy, the cost of the latter’s debt could be reduced and, simultaneously, the countries with the most debt would have an incentive not to exceed the 40% to 60% threshold, to the degree that, beyond that threshold, the cost of their debt would rise.
Angela Merkel has been hostile to this proposal. “With these eurobonds,” she notably declared, “(…) the indebted countries would no longer be under pressure to put their budgets in order.” But there are divisions in her own camp in Germany. In France, both the left and the right are divided on the question. The Socialist Party favors eurobonds (the socialist plan for 2012). It may be pointed out that eurobonds would not have prevented the Greek default and they would increase the dependence of governments on the financial markets and their demands. The eurobond issue is also a way to avoid a debate on the role of the European central bank.