Germany will confront an increasingly united bloc of euro-area nations demanding more ambitious policies to save the currency union this week, as European leaders prepare for a summit setting the course for the currency’s preservation or ultimate demise.
Chancellor Angela Merkel last week resisted attempts by the leaders of France, Italy and Spain to persuade Germany to accept faster action to ease sovereign-debt worries in the financial markets, delineating divisions on greater euro-area integration. The friction between Germany and the rest of Europe was illustrated on June 22 by the Bundesbank’s opposition to European Central Bank plans to help ailing banks, Bloomberg reported.
At a June 22 four-way summit meeting in Rome, Merkel faced a united front among her three interlocutors – Italian Prime Minister Mario Monti, French President Francois Hollande and Spanish Prime Minister Mariano Rajoy – on making the euro region’s rescue funds more flexible.
She dismissed a Monti plan last week to use the funds - the temporary European Financial Stability Facility or the permanent European Stability Mechanism – to buy bonds, and spelled out her opposition to directly recapitalizing banks.
German taxpayers couldn’t back channeling funds directly to banks in other countries because they have no oversight of how the money would be used, Merkel told reporters in Rome.
While the German leader has said repeatedly that counterparts in the euro area need to take a step-by-step approach and that there was no «big bang» solution to the crisis, Italy’s Monti said this week may prove critical to the euro’s survival.
Merkel travels to Paris on June 27 for a pre-summit meeting with Hollande.
Merkel is worsening Europe’s crisis because countries need growth, not austerity, to pay down their debt, billionaire investor George Soros said in a Bloomberg Television interview. «Merkel has emerged as a strong leader. Unfortunately, she has been leading Europe in the wrong direction,» he added.
More Germans would favor leaving the euro area than those in France, Italy and Spain, according to a poll published in four European newspapers yesterday. Some 39 percent of Germans would back such a move, compared with 28 percent of Italians, 26 percent of French voters and 24 percent of Spaniards, according to the Ifop-Fiducial survey.
Meanwhile, German Finance Minister Wolfgang Schaeuble is considering the idea of a national referendum on further European integration, telling that EU members need to move more power to Brussels «without every national state being able to block the decisions.»