Bonds News

Merkel's conservatives rap her election rival Schulz for eurobonds talk

BERLIN, Feb 13 (Reuters) - Chancellor Angela Merkel’s conservatives on Monday rebuked Martin Schulz, the new Social Democratic leader who will run against her in September’s elections, for calling for “euro bonds” in the single currency bloc to relieve its debt crisis.

Peter Tauber, the Christian Democratic (CDU) general secretary and campaign manager, said the party intended to remind voters ahead of the Sept. 24 vote that Schulz, a former European Parliament president, had long advocated the introduction of EU-wide debt - anathema to many in Germany.

“He is the man who was for a mutualisation of debt,” Tauber told reporters in Berlin. He also said Schulz was “the man who wanted to allow Turkey to join the European Union” - another hot button issue that alarms many conservatives.

Germans fear that eurobonds would lead to higher interest rates in Germany, Europe’s biggest and most prosperous economy, and relax pressure on Greece, Italy and Spain to stick with their austerity programmes.

In her 2013 election campaign, Merkel spoke out clearly and often against eurobonds and debt mutualisation. Tauber presented a nine-page dossier on criticisms of Schulz that the CDU plans to use during the coming election campaign.

The dossier quoted Schulz as saying on Jan. 30, 2012: “We want eurobonds. Common debt with a lower interest rate could defuse the debt crisis (in the euro zone) and stabilise the banking system. Eurobonds are a powerful weapon against speculation and exploding interest rates.”

Schulz also told Der Spiegel magazine in 2012 that the introduction of common “euro bonds” across the single currency zone would be the best way to ease the interest burden on indebted member states in the south.

But he also said this was “a theoretical debate” as the more fiscally rigorous northern EU states did not want such bonds.

The CDU attacks on a leadership rival were unusual so early in the election campaign. The SPD said the criticism arose from CDU unease at seeing Schulz eliminate a more than 10-point lead Merkel’s CDU and their Bavarian sister party, the Christian Social Union (CSU), had held until recently.

The SPD, Merkel’s centre-left junior partner in the “grand coalition”, has trailed the conservatives for years in opinion polls and has not won more votes than the CDU/CSU since 2002.

Tauber also accused Schulz - who has struck a chord with voters with his promise to campaign for social justice and fight right-wing populism - of “badmouthing Germany”.

Schulz has criticised the growing gap between rich and poor in Germany and said that more people need two jobs to get by.

Tauber added: “We’re not going to attack Schulz as a person but we will indeed go after his position and comments.”

Thomas Oppermann, the SPD’s parliamentary floor leader, and other SPD leaders warned the CDU/CSU against trying to discredit Schulz, whose popularity has boosted the SPD in opinion polls.

“I hope we’re not seeing the start of dirty campaign tactics,” said Katharina Barley, the SPD campaign manager. (Additional reporting by Andreas Rinke; writing by Erik Kirschbaum; editing by Mark Heinrich)