Germany’s BAIL-OUT ANGER: Merkel in U-turn to BACK Macron’s Eurozone bailout fund plot
ANGELA MERKEL is to back the creation of a eurozone bailout fund similar to the International Monetary fund as she throws her support behind French president Emmanuel Macron’s eurozone reforms - despite opposition from within her own party.
The Chancellor told conservatives in the Christian Democratic Union group she wants to develop the eurozone's rescue fund into a European Monetary Fund (EMF) in which the bloc would retain oversight.
Mrs Merkel is meeting with the French President today to discuss the matter further. She is also reportedly in favour of the fund having greater powers than the existing European Monetary Fund.
However, her plans have not gone down well with junior members of her coalition who do not want her to sign up for anything that could leave the German taxpayer to pay out of pocket.
Mrs Merkel's junior coalition partner, the left-leaning Social Democrats (SPD), have also openly said that they reject many of the eurozone reform ideas.
The sensitive issue is testing the new government in Berlin just a month after the coalition took office.
Many German conservatives fear that if the fund is managed by the European Commission, Germany may be forced to pay for other states that fall behind.
They point to the multibillion-euro bailout of the Greek economy after the southern European nation’s debt crisis as an example.
Their concerns have left the Chancellor having to tread a careful line between Mr Macron's drive for bold reform and her conservatives' fears over an EMF.
Despite this, Mrs Merkel is pressing head, revealing that she is keen for the EMF to act with conditionality - the same approach taken by the International Monetary Fund, which attaches strict reform conditions to aid.
Mr Macron added that he wants the fund to be a ‘rainy day fund’ to safeguard against recession - like the 2009 crash.
French Finance Minister Bruno Le Maire told lawmakers in the lower house of parliament on Wednesday that a deal would be a true partnership.
He said: “Let me reassure you that the silent, secret, demanding work under way will allow us to reach a true Franco-German roadmap by the time of the next European summit in June.”
He added that he expected a "sensible and ambitious compromise".
France and Germany, which account for around 50 percent of euro zone output, are essential to the reform drive.