Eurobonds are about solidarity, which is not Cameron’s strong point

MEP Glenis Willmott writes for Left Foot Forward on how Chancellor Merkel needs to change her mind about Eurobonds

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Glenis Willmott MEP (Labour, East Midlands) is the leader of the European Parliamentary Labour Party

When they met yesterday in Berlin, David Cameron told Angela Merkel that she must back the introduction of Eurozone-wide bonds to stem the crisis.

cameron merkelI’m glad to hear that Cameron is now supporting our policy on Eurobonds. This is an idea that has been championed for years by the group of European Socialists and Democrats in the European Parliament.

The basic principle is that instead of individual Eurozone members issuing bonds, Eurobonds would be collective loans, underwritten by all Eurozone countries.

Because of the risk of defaulting, EU countries which are in real financial trouble, such as Greece, Portugal, Ireland, Spain and Italy, are only able to secure loans from investors with very high interest rates.

This makes the cost of repaying their debts huge. However, if investors had the guarantee that stronger countries such as Germany and France were behind the debts, then the interest rates would be a lot more manageable. For example, Portugal’s annual repayments would fall by €15bn, almost 9% of its GDP, if the interest rate was lowered to the Eurozone average.

Behind the proposal is the principle of solidarity, of working together to help Europe overcome this crisis. Doesn’t sound much like Cameron to me. The man that walked out of talks in December, leaving Britain’s seat at the table vacant, is now trying to convince Germany to solve the crisis at an EU level. Cameron, the Eurosceptic, is preaching the virtues of solidarity and further European integration from the sidelines.

Luckily there are more credible voices fighting for Eurobonds. The Italian and Spanish governments are in favour, as is the head of the European Central Bank. Most importantly, of course, the election of François Hollande and his backing of Eurobonds and other progressive measures has signalled a sea change across Europe. But Chancellor Merkel remains firmly opposed.

 


See also:

Prepare for “no austerity without growth” 6 Jun 2012

Europe’s Right still full-steam ahead on mad dash for austerity 16 May 2012

Vive Hollande! M. Normal wins the day 8 May 2012

European socialists call for regulation of the ratings agencies 18 Jan 2012


 

One of Angela Merkel’s main arguments against Eurobonds is that she thinks they would remove the incentive for failing economies to put their affairs in order. But what we’re seeing in Greece is heartbreaking, people who were working and paying taxes this time last year are now queuing up in the streets for soup. That’s no solution.

And with Spain teetering on the brink, surely intervention at this stage will be much less painful for all of us, rather than trying to rescue the EU’s fifth biggest economy once it is too late. Because it’s clear that if Spain goes down then we’ll feel a real chill here in the UK and in the rest of the EU.

The next few weeks will be crucial for the future of Europe, and Eurobonds are one of a few measures that could be taken now to stabilise the situation. We need brave decision-making, and I hope that Chancellor Merkel changes her stance. If she does it will be thanks to the campaigning of the centre-left across Europe, now spearheaded by M. Hollande, not because of some last minute nagging by David Cameron.

 


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27 Responses to “Eurobonds are about solidarity, which is not Cameron’s strong point”

  1. Pulp Ark

    Eurobonds are about solidarity, which is not Cameron’s… http://t.co/RZK2Urme #MultilateralForeignPolicy #AngelaMerkel #muslim #tcot #sioa

  2. leftlinks

    Left Foot Forward – Eurobonds are about solidarity, which is not Cameron’s strong point http://t.co/lLajpUn9

  3. Owen Williams

    Eurobonds are about solidarity, which is not Cameron's strong point, writes MEP @GlenisWillmott: http://t.co/LCM5Pgnw

  4. swardley

    Ah, the rise of the EuroBonds – http://t.co/cdJnngX8. Question is how will it play out, my thoughts – section 2 – http://t.co/bMhHGB6n

  5. swardley

    Ah, the rise of the EuroBonds – http://t.co/cdJnngX8 – question is how will it play out, my thoughts in section 3 – http://t.co/bMhHGB6n

  6. Richard Hall

    Eurobonds are about solidarity, which is not Cameron's strong point, writes MEP @GlenisWillmott: http://t.co/LCM5Pgnw

  7. Franz

    There are some good points in your article. But you actually don’t understant Merkel’s point that Eurobonds “would remove the incentive for failing economies to put their affairs in order.”
    You are arguing with strong words like “heartbreaking”, but that is no real argument. Merkel clearly has a point that she wants European control mechanisms to avoid that economically stronger countries like Germany and France are drawn down by countries like Greece and Spain.

  8. JC

    Is there any reason why the other Eurozone countries can’t get together to create their version of Eurobonds? My understanding is that it is against the German constitution, but other countries may find it easier.

    If the reason for Eurobonds is to make the Germans pay for someone else’s financial mismanagement, then wouldn’t full fiscal (and political) integration make more sense? That way there can be a democratically elected government to decide how to manage the economy.

  9. Lord Blagger

    Give us your credit card. I want to carry on spending spending, spending.

    Ah yes, you won’t.

    They just want the Germans to pay for their spending.

  10. Lord Blagger

    Exactly.

    They have run up the debts. They should pay for it. However that means massive cuts in spending and huge increases in taxes. Even then its not enough. That leaves the last option default.

    The same is going to happen here. Government debt figures are a fraud. For example, why don’t they admit to owing the civil servants a pension? According to the government accounts they aren’t owed anything. That’s a warning that they have no intention of paying out in full.

  11. Lord Blagger

    One of Angela Merkel’s main arguments against Eurobonds is that she thinks they would remove the incentive for failing economies to put their affairs in order. But what we’re seeing in Greece is heartbreaking, people who were working and paying taxes this time last year are now queuing up in the streets for soup. That’s no solution.

    =========

    It’s the inevitable consequence of massive debts.

    However, Milliband wants more and more debt, and that’s his solution for the UK.

  12. Kieron Merrett

    Eurobonds are about solidarity, which is not Cameron’s strong point – @GlenisWillmott http://t.co/wx3IU73I

  13. Glenis Willmott MEP

    Eurobonds are about solidarity, which is not Cameron’s strong point – my blog for @leftfootfwd http://t.co/El6bFxRI

  14. Michael

    Eurobonds are about solidarity, which is not Cameron’s strong point – http://t.co/e8TlAg0h

  15. Franz

    I totally agree. At the current status of political integration all Europeans except Germany wants Eurobonds to make “Germans pay for someone else’s financial mismanagement”, and that even without European control (further political integration). So Europeans just have to decide: if they want German money, they have to give up sovereinity to Europe and go towards a European state. I think in that case Germany would not object to any Euro Bonds. At the current stage for me (as a German) it looks like all Europeans oppose further integration but just want German money.

  16. Anonymous

    Except, of course, you ARE handing over people’s credit cards and insisting they spend. More, on the same basics. More, more, more for you. Never mind their incomes are falling, no, MORE!

  17. Anonymous

    No, it’s the consequence of capital not paying it’s way. You want that for all the 99%, and we’re going to start seeing it en-mass in this country….food banks are overwhelmed, and soup kitchens are never far behind being needed in that situation.

    Like any third-world country.

  18. Anonymous

    The debt remains just as payable. Efficiency and profits are higher than ever. But your kind are hiding them, refusing to pay proper tax on your beloved capital. Better thousands starve than you lose a penny on your shares.

    You’re working very hard to raid every possible source, such as pensions, to hide your crimes. ANYTHING BUT PAY UP is your motto.

  19. Sue

    Eurobonds are about solidarity, which is not Cameron's strong point http://t.co/whAHf72T HARD TO BELIEVE THIS WOMAN ACTUALLY WORKS IN THE EU

  20. Netbook Nomad

    Eurobonds are about solidarity, which is not Cameron's strong point http://t.co/whAHf72T HARD TO BELIEVE THIS WOMAN ACTUALLY WORKS IN THE EU

  21. Mr. Sensible

    I entirely agree, Glenis. When are the austerians going to accept that austerity has failed, and we’re all paying the price for it? The sooner the right realise this, the better for everyone.

  22. John Marchant

    Eurobonds are about solidarity, which is not Cameron's strong point http://t.co/whAHf72T HARD TO BELIEVE THIS WOMAN ACTUALLY WORKS IN THE EU

  23. BevR

    RT @leftfootfwd: Eurobonds are about solidarity, which is not Cameron's strong point http://t.co/Rscg3ifB

  24. LME Executive

    Eurobonds are about solidarity, which is not Cameron’s strong point – my blog for @leftfootfwd http://t.co/El6bFxRI

  25. Ozziebiker

    Eurobonds are about solidarity, which is not Cameron’s strong point – my blog for @leftfootfwd http://t.co/El6bFxRI

  26. Four reasons Britain should remain in the EU | Left Foot Forward

    […] Eurobonds are about solidarity, which is not Cameron’s strong point 8 June […]

  27. Jack Schofield

    Eurobonds are about solidarity, which is not Cameron’s strong point – my blog for @leftfootfwd http://t.co/El6bFxRI

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