Chancellor Angela Merkel called Thursday for the creation of a fund to help cash-strapped eurozone governments invest while forcing them to implement tough reforms to liberalize their economies.
She was speaking in parliament, as 27 EU leaders prepared to
gather in Brussels for a summit to consider new moves for shoring up
the troubled eurozone.
Rejecting calls to "mutualize" the debts of the battered
governments of southern European nations, the chancellor said she
would instead propose the creation of a joint "project-tied" fund
which could be financed by a future financial transactions tax.
Berlin has been widely criticized for only pursuing austerity and
tough economic reforms to end the crisis.
With this in mind, the chancellor's proposal appeared to concede
that governments must now spend to help get their stricken economies
going again.
"I propose we introduce a new element of solidarity, a fund, from
which money can be obtained, for a limited time, attached to
projects, because not all the countries will be able to
simultaneously consolidate their budgets and make the necessary
investment in the future," she said.
The fund would shore up reforms in the eurozone by imposing
conditions on the governments that borrowed from it. She said such
conditions would improve the competitiveness of national economies,
but did not go into detail.
Past EU funds "sometimes did not help and sometimes actually
encouraged the wrong developments," she said.
Merkel said that EU states which were not yet members of the
17-state eurozone could also participate in the new fund, "provided
they are willing to make binding commitments to the (European)
Commission on improving their competitiveness."
Eleven eurozone nations have already agreed to introduce a
transactions tax, which Merkel said "could lead to more countries
introducing such a tax."
Merkel poured cold water on attempts to set up a eurozone bank
regulator by the start of next year, quoting the head of the European
Parliament as saying the bill could not be passed by that time.
"Quality is more important than speed," she said.
"I will say this quite bluntly. Merely completing the legislation
for a regulator will not be enough," she added. Direct
recapitalization of foundering banks by the eurozone bailout fund
could not begin until after the regulator was up and running.
The chancellor also strongly backed calls this week by her finance
minister, Wolfgang Schaeuble, for the European Union's monetary
affairs commission to sign off on national budgets before governments
can implement them.
Berlin wanted the commissioner to have "genuine disciplinary
powers over the national budgets," she said.
Accusing critics of trying to "shout down" the idea, Merkel said
she was aware that many other EU nations were hostile, but "that
won't change the fact that we are going to strongly advocate" it.
Merkel's main challenger at next year's general election, Peer
Steinbrueck, a Social Democrat, accused her of using only one remedy,
austerity and "saving, saving, saving," to end the crisis.
Steinbrueck, who is seeking to unseat her as chancellor when
Germany goes to the polls in September 2013 and spoke immediately
after her, also accused her of allowing members of her
conservative-led coalition government to "bully Greece."
He told parliamentarians: "Germany's future is Europe and we have
to invest in this future."
In her speech, Merkel slammed corruption in Greece, but said it
was sincerely trying to change and would remain in the eurozone.
