GERMAN CHANCELLOR Angela Merkel last night gave short shrift to a political ally’s call for the use of gold as collateral for all future euro zone bailout loans.
Labour minister Ursula von der Leyen’s suggestion yesterday caused ructions in Berlin and prompted an immediate denial that it represented government policy.
The solo run appeared a calculated effort by the minister to boost her domestic profile ahead of an emergency Bundestag sitting of the ruling Christian Democratic Union (CDU) last night.
Dr Merkel, without mentioning her minister by name, said making new ideas via the media was “not the way to get things done” in the euro zone crisis.
In a newspaper interview, Dr von der Leyen, who is also a deputy CDU leader, suggested that long-term collateral such as gold reserves could ensure budgetary discipline over a long period from bailout recipients.
“Some states are making great efforts to service their debts, something that should be acknowledged,” she said in remarks reported on public television. “So that these efforts are upheld in the long-term, however, collateral will be needed.”
Her spokesperson declined to say whether the minister’s remarks were limited to Greece or to other recipients of EU/IMF loans, such as Portugal or Ireland.
The remarks, echoing similar sentiments already made by other German government politicians, unsettled market analysts, already nervous about the consequences of last week’s bilateral deal over collateral that Greece has agreed with Finland.
The deal, pending euro zone member approval, would see millions of euro deposited in an escrow account as collateral for future Finnish loans to Greece.
It has prompted widespread criticism and calls for similar collateral from politicians in Slovakia, the Netherlands, Slovenia and Austria and may not now be implemented.
“Many countries reject the solutions that Finland negotiated for itself to the disadvantage of all others,” said Austrian finance minister Maria Fekter.
Ratings agency Moody’s said the renewed calls for collateral demonstrated a lack of political will to push through last month’s bailout deal.
In the Reichstag yesterday evening, CDU chief whip Volker Kauder dismissed the minister’s remarks.
“The discussion started by the Finns is not one we should continue here,” said Mr Kauder. “All indications are that we will have a broad majority for the toughening up of the rescue fund.”
CDU finance spokesman Michael Meister said the call for loan collateral was a distraction. “The most important thing is that central banks retain independent control of their own gold reserves,” he said.
