By Stephen Brown and Annika Breidthardt
BERLIN Oct 30 French Finance Minister Pierre
Moscovici urged the euro zone on Tuesday to take a first step to
mutualise its short-term debt, stopping short of jointly-issued
"Eurobonds" which he recognised German Chancellor Angela
Merkel's government flatly rejects.
"We are not talking any more about Eurobonds. I know it is a
red line here in Germany, for some, the present government among
them," Moscovici said at a conference alongside his German
counterpart, Wolfgang Schaeuble.
"What I mean is that we need to address together the debt
issue, and this must be backed by all 17 members of the euro
zone, in order to pool some short-term sovereign funding
instruments to build a first step towards some kind of
mutualisation of the debt," said Moscovici, speaking in English.
Merkel has categorically ruled out the creation of Eurobonds
as long as she is in power, arguing that they remove the
incentive for member states to get their own budgets in order.
She is expected to seek a third term in power next September.
Moscovici appeared to be endorsing a proposal dating from
late 2011 for short-term common debt instruments for the
currency zone known as "Eurobills".
The proposal by two economists - one of whom, Thomas
Philippon, is now an adviser on Moscovici's staff - involves
setting up a new euro zone debt management office.
The right to issue jointly underwritten bills, with less
than one year's maturity, would depend on meeting EU deficit
targets and economic policy goals.
EU Economic and Monetary Affairs Commissioner Olli Rehn gave
the proposal some traction in a paper a year ago, depicting
Eurobills as a stepping stone toward fully fledged "stability
bonds". But formal discussion among ministers has met German
Merkel included Eurobills on a list of ideas that she
described as "economically wrong and counterproductive" just
before an EU summit in June.
The French and German ministers both backed the idea of a
special budget for the 17 members of the euro zone, alongside
the budget for the 27-nation European Union. Moscovici said it
would act as "an automatic stabiliser on matters that are key to
the success of our monetary union".
"Such a budget would not replicate, in my view, the existing
EU 27 budget," said Moscovici.
Schaeuble's proposal for giving radically-expanded powers to
veto member states' budgets to Europe's commissioner for
monetary affairs won backing this weekend from European Central
Bank chief Mario Draghi in a German media interview.
The German minister said giving Rehn the same legal powers
as Competition Comissioner Joaquin Almunia, who can veto mergers
that inhibit competition on his own authority, "would give much
more credibility to the actual implementation of European law".
Moscovici and Schaeuble both urged the European Parliament -
whose president, Germany's Martin Shulz, spoke on the same panel
in Berlin - to enable its members from euro zone states to act
separately on issues affecting the single currency.
This would get around the problem that each major decision
by the euro zone requires approval by 17 member states' national
parliaments, slowing policymaking, said Schaeuble.
The German and French ministers were due to hold a short
private meeting at 11 a.m. (1000 GMT) ahead of a phone call on
Wednesday among euro zone ministerial experts about the results
of "troika" mission to Greece to check on its reform progress.
Speaking to reporters before the conference, Moscovici
declined to go into details about what he and Schaeuble would
discuss on Greece, but said: "We are at the moment in the
conclusive phase of the negotiations."