EUROZONE ON BRINK: Crisis looms as Merkel reveals she will SNUB Italy's debt relief plea

Posted on Jun 3 2018 - 3:57pm by admin

Speaking to the Frankfurter Allgemeine Sonntagszeitung, she said in an interview that the EU would not turn into a “debt-sharing union”.

The 63-year-old made her remarks when asked about the Five Star Movement and Lega’s joint plea for the European Central Bank to pardon Italy’s eye-watering €250billion debt.

The Chancellor said while member states standing together was important, “solidarity among euro partners should never lead to a debt union, rather it must be about helping others to help themselves”.

She added: “I will approach the new Italian government openly and work with it instead of speculating about its intentions.”

The news will be met with anger in Rome where the new coalition has just taken power and has promised to take on Brussels over imposed-austerity.

Ms Merkel was also probed on whether she was willing to give the nod to French President Emmanuel Macron’s appeal to turn Europe’s existing bailout fund into a European Monetary Fund.

Mr Macron wants the European Monetary Fund (EMF) to act as a buffer in any future financial crises in the EU after it came close to being torn apart by a debt crisis in 2009.

But Ms Merkel insisted the money known as the would not be enough to shield the bloc from future debt catastrophes and that the EMF should instead be granted powers to give crumbling member states short-term credit loans.

She said: “If the whole euro zone is in danger, the EMF must be able to grant long-term credit in order to help countries.

“Such loans would be spread over 30 years and be conditioned on sweeping structural reforms.”

She added: “In addition I can imagine the possibility of a credit line that is short-term, five years for example. As such, we would be able to take under our wing countries that get into difficulties because of extraordinary circumstances.”

Ms Merkel’s lawyers have been cold to Mr Macron’s proposal and on the basis they fear German taxpayers’ money will be used to fund profligate member states.

Ms Merkel congratulated Italian Prime Minister Giuseppe Conte in a phone call on Saturday and invited him for talks in Berlin.

The 53-year-old was sworn in on Friday, ending three months of political deadlock in the wake of inconclusive March 4 elections.

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