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Dec. 9 (Bloomberg) -- A European Union summit agreement on enforcing debt and deficit limits may herald the start of the path toward joint euro-area debt, said a senior member of German Chancellor Angela Merkel’s Christian Democratic Union party.
“You can have more rules and more instruments for common responsibility if you have bigger assurance that every part of it plays by the rules,” Elmar Brok, a CDU lawmaker in the European Parliament, said in an interview in Brussels today. With the summit agreement, the euro area has “a legal framework in which it can be discussed and enforced.”
Merkel and French President Nicolas Sarkozy rejected euro bonds as recently as Dec. 5, yet have left the door open to joint liability at the end of a process of “fiscal union.” European Commission President Jose Barroso made a proposal last month for common bond issuance once there’s “a greater level of integration and discipline in the euro zone.”
While euro bonds were not discussed at the all-night summit, Luxembourg Prime Minister Jean-Claude Juncker told reporters after it ended today that he was “happy the subject of euro bonds is not completely off the table.”
Any decision to issue joint debt won’t come unless policy makers ensure that the region’s financially stronger countries won’t face “much higher interest rates” and that the weaker countries don’t ease up on fiscal discipline, Brok said.
“Euro bonds could not be done before we have these changes in place,” he said.
--Editors: Alan Crawford, James Hertling
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