AFP, DPA/Brussels / Berlin
Westerwelle: ‘I do not understand Barroso’s comments’
A war of words between Brussels and Berlin over the eurozone crisis fund intensified yesterday as the European Commission president called on Germany to respect its role as it seeks to boost the pot.
"I expect top German politicians to respect the role of the commission. We in the commission have not only the right, but also the duty, to tell Europe’s citizens what we think is right,” Jose Manuel Barroso told Spiegel magazine.
Brussels wants to boost the €440bn ($589bn) European Financial Stability Facility (EFSF) to reassure nervous markets the stability of the eurozone "is not in question”, a move slammed by Europe’s top economy.
"Up until now, only a small percentage of the rescue fund has been used. So, in the government’s view, there is no need to expand it,” Foreign Minister and Vice-Chancellor Guido Westerwelle said in the Tagesspiegel am Sonntag weekly.
"I do not understand Barroso’s comments. If only a small part of the fund has been used, then there is no need to discuss making it bigger,” he added.
When combined with €250bn from the International Monetary Fund and a further €60bn from the whole EU, the entire package is worth €750bn.
So far, only debt-wracked Ireland has needed to tap the fund but analysts fear it would be insufficient if bigger countries, such as Spain or even Italy, needed to use it. The row is likely to dominate a meeting of eurozone finance ministers beginning today.
However, in a sign that Berlin was prepared to compromise, Finance Minister Wolfgang Schaeuble spoke yesterday of increasing the effective lending capacity of the crisis pot.
The EFSF’s actual lending capacity is estimated at only €250bn as some of the fund must be kept in reserve to secure a top rating when it borrows money on the markets.
"We must and we will solve this problem,” the minister told the Frankfurter Allgemeine Sonntagszeitung weekly.
Meanwhile, the head of the European Central Bank has rejected criticisms of the euro by some Germans, telling a mass-circulation newspaper that the euro was a more stable currency than Germany’s old Deutschmark.
"In the past 12 years, the average rate of price increase in the eurozone has been 1.97%, and in Germany only 1.5%,” Jean-Claude Trichet said in remarks quoted by the paper Bild.
"Those are better numbers than for the 50 years as a whole before the euro.”
The ECB president said the common currency had proved "credible and stable” during the debt crisis.
He was responding to nostalgia recorded in recent polls showing a significant number of Germans still long for the Deutschmark, which was retired at the start of 2002.
He said the fiscal deficits of the eurozone as a whole during 2011 would be only half as big as in Japan or the US. All industrialised nations, he added, currently have budget problem.
"This fact is often forgotten,” said Trichet. But he urged eurozone governments to slash spending harder. "The ECB is expecting governments in the eurozone to make enormous efforts to reduce debt.”
Trichet said there was was no crisis of the euro as such. "It’s rather that we have a crisis of public finance in some nations. States that had spent more than they earned had to act.
"Debts must be repaid. This is an issue of trust”