Paris yields on euro bonds

Eurobonds won’t be coming any time soon. France, through its prime minister, has just accepted what Germany has been saying for months. In an interview with the German weekly Die Zeit, Jean-Marc Ayrault recognises that —

Communitisation of debt requires greater political integration, and that will take some years to be carried out. It’s just that we cannot wait that long to act. Once again, time is pressing.

The new head of the French government, criticising all-out austerity once again, suggests other ways out of the euro crisis, however —

We must move towards common banking supervision, with a European system for deposit guarantees. We can also find solutions that allow states to have easier access to financing [...]. In the short term, the role of the European Stability Mechanism (ESM) should be strengthened. Under certain conditions, it should be allowed to act like a bank to ensure that States do not go into more debt on the backs of the taxpayers.

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In Paris, La Tribune notes that “by falling into line on the eurobonds question, the new French government is giving up the heart of its European program.” Recalling Chancellor Angela Merkel’s sharp criticism of François Hollande’s proposals, the daily estimates that —

... the new French president has taken note of this lesson. He has forgotten that promise of debt pooling that he was proudly pushing for a month back. [...] He has forgotten it, like he has forgotten his notion of reshaping the ECB along the lines of the American central bank – a real casus belli for Berlin – and like he has forgotten about renegotiating the fiscal pact to slip into it a ‘section on growth’, now reduced to trivial occasional measures that no one can seriously believe will have any impact on the European economy, let alone on the French.

“With these setbacks,” La Tribune concludes, “Paris is acknowledging its weak position in Europe.”