BERLIN — The Netherlands’ finance minister is urging Germany to hold firm in its opposition to eurozone-wide government bonds, which he argues would have “perverse” effects.
However, Jan Kees de Jager was quoted Sunday in an interview with German weekly Der Spiegel as indicating that his country might be open to increasing the existing euro440 billion ($633 billion) eurozone rescue fund.
Financially solid Germany’s government has led opposition to so-called eurobonds, viewed by some as a logical solution to the debt crisis that has pushed up troubled countries’ borrowing costs.
But their rejection last week by Chancellor Angela Merkel and France’s president hasn’t stopped advocates — in Germany’s opposition and elsewhere — pushing for them.
“Eurobonds are not the solution,” De Jager told Der Spiegel, arguing that they would remove any incentive for troubled countries to get their budgets and economies in order and “induce governments to run up more debts instead of saving.”
“I call that perverse,” he said, adding that he expects Berlin to stick to its position.
At a summit last month, eurozone leaders agreed to expand the powers of the current bailout fund, but left its size unchanged — even though analysts warn that it isn’t big enough should many more and larger countries need rescuing.
Asked whether the fund needs to be increased, De Jager was quoted as saying: “440 billion euros is not a small amount of money, but in case of need we can be talked to.”
But he showed little enthusiasm when asked about the idea of doubling the fund, arguing that could have an impact on some donors’ creditworthiness.
Another irritant in Europe’s efforts to resolve the crisis is a deal struck by Finland to secure collateral from Greece as security for its part of the new bailout package for Athens. The Netherlands, Slovenia, Austria and Slovakia would like similar treatment.
“This is a question that must be debated by all countries in the eurozone,” De Jager was quoted as saying. “We have indicated in all negotiations that, if Finland gets a deposit, the Netherlands wants one too.”