Franco-German bonds would be a good move, senior Merkel ally says
06 Oct 2017 - 22:59
By Andreas Rinke / Reuters
BERLIN: A joint Franco-German bond would be a good first step by Germany’s new government towards cooperating with French President Emmanuel Macron’s call for reform of the euro zone, a senior ally of Chancellor Angela Merkel said on Friday.
Germany has always opposed any plans for the euro zone to issue collective debt, but Norbert Roettgen, a member of Merkel’s Christian Democrats (CDU), said the new government needed to understand Europe must make progress.
“Germans have a responsibility for Europe,” Roettgen, the head of the parliamentary foreign affairs committee, said in an interview with Reuters. “It’s of strategic importance to us that there is no paralysis or standstill in Europe.”
Merkel won a fourth term in a national election on Sept. 24, and her conservatives are expected to form a three-way coalition with the Greens and the liberal Free Democrats (FDP), who were critical of Macron’s European ideas during the campaign.
“Germany can’t say no to everything,” said Roettgen, who is a senior conservative, although not part of Merkel’s inner circle.
“We need to be clear that totally rejecting other partners’ wishes will not take Europe forward,” he said. “That’s why I suggest joint German-French bonds for very targeted investment projects.”
That would create shared risk between Germany and France, but it would not involve the same dangers as bonds sold by the entire euro zone, he said.
“The probability of default would be extremely low,” Roettgen said. Financial markets would give Franco-German bonds the highest credit rating and that would also be a sign of confidence, he said.
Merkel’s conservative bloc should not be alarmed by the idea, he said, because the bonds would not be used for general government financing. Instead, they would finance specific investments in start-ups or infrastructure projects, he said.
He said the bonds were important because it was necessary for the EU to carry out reforms for closer cooperation.
“In the EU we need quick results. People should not get the impression that Europe is stalling,” he said. “To gain acceptance we need legitimacy via practical successes.”
He said progress was possible in Franco-German cooperation, such as in defence and security, and was also necessary on economic issues. France needed to reform, but Germany should help, he said.
(Reporting by Andreas Rinke; Writing by Michelle Martin; Editing by Larry King)