As leaders in the European Union still dither over what, if anything, to do to keep Greece in the euro zone, Chancellor Angela Merkel of Germany met with resistance at home to her austerity-only position even as Prime Minister Mario Monti of Italy gave a different account of Wednesday’s summit meeting than was offered by the Luxembourg prime minister, Jean-Claude Juncker.
Spain looked to the European Central Bank (ECB) for help, and more bad news came in the form of downgrades for some of the largest Nordic banks and a deeper slump in the U.K.
Bloomberg reported Friday that Monti and Juncker offered differing versions of the informal Wednesday summit, with the former saying he could bring Merkel around to consider joint euro bonds for the “common good” while the latter said such bonds “didn’t find much support,” particularly among German-speaking countries, although French-speaking countries were more favorably disposed toward them.
Regardless of how the summit went, Merkel went home to find additional arguments in favor of growth rather than austerity at a meeting in Berlin on Thursday. The opposition parties got her to agree to reconsider a separate proposal on common liability for sovereign debt. Additional discussions on the proposal will be held on June 13.
Mariano Rajoy, prime minister of Spain, had spoken out at the Wednesday meeting seeking additional bond buying from the ECB, Bloomberg reported. He has repeatedly said that Spain will not seek a bailout, but he called upon the ECB to do more to bring down the cost of borrowing in euro zone countries struggling with debt.
Not only Spain but also Ireland, Italy and of course Greece are paying high rates on bonds, and Rajoy called for relief, saying, “If public debt isn’t sustainable, we have a problem. I insist it is up to the ECB to take this decision that it has already taken in the past.”
However, the ECB is resisting, with its president, Mario Draghi, instead calling for “a brave leap” on the part of eurozone governments to achieve greater integration. Without that, Draghi said, any measures the ECB takes will only be temporary.
“The non-standard measures implemented by the ECB helped us gain time,” he said in the report. “But we have now reached a point where the process of European integration needs a brave leap of political imagination.”