Wiggle room?

German Chancellor Angela Merkel underlined on Sunday her government's opposition to eurobonds - a plan which would pool the 17 eurozone nations' debt - but left the door open for a possible change in policy at a later date.

In an interview with public TV channel ZDF, Merkel said that eurobonds would be "exactly the wrong road to take" because they would lead to a "debt union instead of more stability."

"The solution to the current crisis will not be with eurobonds," she said, as European Central Bank chief Jean Claude Trichet also rejected the plan, saying it would create harmful incentives in Europe.

However, Merkel added that she did not know "whether we in the distant future will need to further adapt."

On Tuesday, French President Nicolas Sarkozy and Merkel said at a summit in Paris that eurobonds were not the answer "today" to the eurozone debt crisis.

But the two leaders appeared to leave the door open to a change in policy if circumstances in the eurozone worsen, sparking rumblings of concern in Berlin.

Categorical opposition

In an interview published in the Sunday edition of Germany's most-read newspaper, Bild, the leader of Merkel's junior coalition partner stressed that the German government would never sign on to the eurobond plan.

"I rule out that there will be eurobonds with this government," said Philipp Rösler, leader of the pro-business Free Democrats (FDP).

"This is what the FDP stands for," he added.

Horst Seehofer, head of the Christian Social Union, the Bavarian sister party to Merkel's Christian Democrats, told the weekly Wirtschaftswoche business magazine that his party would prevent attempts to spread out Europe's debt burden among different nations, which he said would only give rise to an "inflationary trend."

"We will not go along with […] pooling debt. You cannot overcome excessive debt by spreading the burden to all."

Seehofer said the scheme, as well as being "unfair," would damage Europe's economy.

"The effect would be debt, inflation and the destruction of economic opportunities," he said.

Supporters of the plan, including Germany's opposition Social Democrats, call eurobonds a viable solution to the eurozone's debt crisis, since they would see the monetary union's economically strongest states, led by Germany, underwriting weaker countries, which in turn would find it easier to raise credit on the markets.

Opponents say it would increase Germany's own borrowing costs and remove an incentive for indebted nations to put their own fiscal houses in order.

Author: Gabriel Borrud (AFP, dpa)
Editor: Kyle James