PARIS (Reuters) – Angela Merkel was so determined to kill off the idea of issuing common European bonds that, having tried to squelch it, the German chancellor reversed over it several times last week to make sure it was dead.
French President Nicolas Sarkozy, anxious to stay in Germany’s slipstream and avoid any threat to France’s top notch credit rating, joined her in swatting the suggestion, for now.
But the “E-bond” proposal championed by Jean-Claude Juncker, the chairman of euro zone finance ministers, and Italian Economy Minister Giulio Tremonti won’t go away because it makes sense.
“I’m convinced we’ll end up doing it, because it’s obviously the most effective solution,” said Jean-Herve Lorenzi, president of the Cercle des Economistes, a French economic think-tank. “Everyone thinks it’s a good idea but it can’t be brought into play for the moment.”
The euro zone debt crisis may have to get much worse before Germany, Europe’s chief paymaster and stickler for budget discipline, is prepared to accept such a quantum leap in European fiscal integration.