BERLIN The leaders of Chancellor Angela Merkel's centre-right coalition agreed on Thursday that Germany's opposition to common euro zone debt issuance was non-negotiable, Economy Minister Philipp Roesler, said on Thursday.
Roesler, also head of the Free Democrats, told reporters he had spoken to Merkel and Horst Seehofer, leader of the conservative Christian Social Union (CSU), on a conference call and they were united in a flat rejection of euro bonds to help solve the debt crisis.
"We are not prepared to buy into changes to the (EU) treaty in exchange for rules that other European countries want, for example euro bonds," he said at a news conference in which he outlined proposals for treaty change.
"The three of us clearly and expressly reject this," he said, adding that a debt union would be the wrong path.
Merkel is pushing for treaty change as a way to solve the debt crisis and boost economic integration among members.
EU leaders are under pressure to agree possible changes at a summit next week and Merkel will address the German parliament on the crisis on Friday.
Reaching agreement is difficult. Merkel, facing German voters tired of being the EU's paymaster, wants the European Commission to be able to refer serious deficit offenders to the European Court of Justice but France objects.
Roesler also said that the coalition leaders had agreed it would be wrong to put pressure on the European Central Bank to take on a more active role in the crisis and that the bank's independence was a good thing and should remain so.
"Therefore it must, in its own remit, decide what it thinks is right," said Roesler.
Roesler, whose FDP has taken a tougher line than Merkel's conservative Christian Democratic Union (CDU) on euro zone bailouts, proposed setting an EU deficit ceiling of 2 percent of gross domestic product.
The EU's original "stability and growth pact" set a ceiling on the deficit of 3 percent of GDP which has been broken at some stage by many euro zone member states.
Roesler's paper, entitled "Stability and Competitiveness in Europe," has been sent to Merkel's office for consideration.
He also said the planned European Stability Mechanism should be developed into a body modeled on the International Monetary Fund (IMF).
Roesler argued the case for tougher automatic sanctions for states that break deficit rules and said freezing EU payments from structural funds was an option as was the withdrawal of voting rights and EU involvement in members' budget plans.
Under Roesler's plans, a "stability committee" of independent experts could be created to make recommendations to improve competitiveness and check national budget plans and facilitate better coordination.
Roesler said addressing the roots of the crisis could take up to five years.
(Reporting by Gernot Heller and Madeline Chambers; Editing by Toby Chopra)