The eurozone bonds proposed by French President Francois Hollande amount to “interest rate socialism” that would saddle Germany with high costs, said Rainer Brüderle, chairman of the Free Democratic Party parliamentary group, in German newspaper Die Welt.
“Eurobonds are interest-rate socialism for which Germany and other successful countries will have to pay highly. We’re not going along with that. You can’t have a system where some people pay but everyone benefits.”
Brüderle said he is in favour of a mobile European workforce to alleviate high unemployment rates.
Germany has too few vocational students and too few people with a trade, he said, while “France and Spain have high unemployment among young people. It would be far better for young French and Spanish people to move to Germany for job training. That would help the youth and help Germany.”
We will not be moved: Rutte
On Friday, Dutch Prime Minister Mark Rutte said he would veto an endorsement of eurobonds, should Germany, Finland and Portugal bow to pressure from other EU countries.
“I don’t expect Germany to give in, but even if it does, I think the Netherlands should not agree,” the PM said. Besides Germany, Finland and Portugal, a number of Baltic countries are also opposed to Hollande’s idea.
“Suppose everyone capitulates and agrees to it in the end, then we can and will block it,” Mr Rutte said. The introduction of eurobonds would only serve to slow down economic growth as countries which don’t keep their deficit under control would then be rewarded with a low interest rate, he added.
The idea of the eurobond is to help countries with a large national debt to be able to borrow from financial markets at affordable interest rates. As it stands now, interest rates for struggling countries are higher - because investors have less confidence in them - which in turns adds to their national debt mountain.
So, if the European commission were to borrow on behalf of all eurozone members by issuing joint bonds, then countries like Portugal, Spain or Italy would pay less interest because investors could be confident that the stronger countries stood behind their debts.
The policy would make it more difficult for credit-ratings agencies and investors to target individual countries. Italian Prime Minister Mario Monti and the Organisation for Economic Co-operation and Development have recently voiced their support for the eurobond. The European Central Bank is also open to the idea.
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