Jean-Claude Juncker, Luxembourg prime minister and Eurogroup chairman, attacked Germany today for acting in an 'un-European' manner for the way it blocked proposals for euro zone bonds.
Juncker told German weekly Die Zeit in an interview that the German government had not properly looked at the proposal, which was aimed at helping weaker euro zone members raise money, before deciding to oppose it.
'Germany's thinking was a bit simplistic there,' he said. 'They are rejecting an idea before studying it. This is very strange. This way of creating taboo areas in Europe and not dealing with others' ideas is a very un-European way of dealing with European matters,' he said.
At a meeting of euro zone finance ministers this week, Germany rejected the proposal, which was was made by Juncker and had won backing from Italian Finance Minister Giulio Tremonti.
German Chancellor Angela Merkel said it would weaken the incentive for states with troubled finances to get their house in order. Spain and the Netherlands are also opposed to the idea.
Such collective 'E-bonds' could help euro zone members seen by investors as having shaky public finances lower their borrowing costs, since the bonds would be backed by other countries and therefore seen as less risky.
Sky-high interest rates for Irish and Greek bonds contributed to both countries going to the European Union and the International Monetary Fund this year for bail-outs worth tens of billions of euros.
Painful yields or interest rates on bonds sold by other members of the 16-nation currency union including Portugal and Spain have raised fears that they too will need help.
But at a meeting of euro zone finance ministers this week, Germany was adamant that it thought Juncker's idea, which won backing from Italian Finance Minister Giulio Tremonti, was not the way forward.
And ahead of a crunch EU summit next week, Germany has also put its foot down over increasing the size of the EU-IMF €750 billion bailout fund despite fears it would be too puny if Spain threw in the towel.
German Chancellor Angela Merkel has said joint euro zone bonds would weaken states' rigour in bringing their finances in order, something she sees as key to preventing another crisis.
'Interest rate competition is a way of getting euro zone members to stick to stability criteria,' Merkel said earlier this week.
Germany, whose finances are seen as so solid that it currently enjoys among the lowest borrowing costs in Europe, fears that joint euro zone bonds could push its bond yields higher.
Juncker said that his proposal would not see all joint euro zone bonds have a one-size-fits-all interest rate.
