Merkel defies pressure on debt crisis

German Chancellor, Angela Merkel, urged Europe on the 21 August 2011 to stand firm in the face of market pressure and the 'dramatic crisis' gripping the eurozone, insisting the solution was for states to slash public debt and boost competitiveness.

'Politics cannot and will not simply follow the markets', Germany’s chancellor said, repeating her refusal to countenance funding indebted nations with a eurobond guaranteed by all members of the single currency bloc.

However, Deutsche Welle reported that Chancellor Merkel left the door open for a possible change in policy at a later date.

Spiegel Online International reported that research conducted by the German government suggested that the bonds would face tough legal challenges in Germany, and would cost Germany billions in additional borrowing costs.

Handelsblatt, 23.8.11: Taking sides on eurobonds (via _PressEurop) http://www.presseurop.eu/en/content/news-brief-cover/879541-taking-sides-eurobonds

Spiegel Online International, 23.8.11: Merkel Seeks to Forestall a Conservative Revolt http://www.spiegel.de/international/germany/0,1518,781919,00.html

ESO: Background information: Merkel and Sarkozy pledge to defend euro http://www.europeansources.info/record/france-and-germany-plan-joint-taxation-merkel-and-sarkozy-pledge-to-defend-euro/

ESO: Background information: Reynders pushes case for eurozone bonds http://www.europeansources.info/record/reynders-pushes-case-for-eurozone-bonds/

EurActiv, 22.8.11: Germans slam Merkel, Sarkozy leadership in crisis: Poll http://www.euractiv.com/elections/germans-unimpressed-merkel-sarkozy-leadership-poll-news-507062

Deutsche Welle, 21.8.11: Merkel, still hesitant, shows wiggle room around eurobonds http://www.dw-world.de/dw/article/0,,15333558,00.html

Spiegel Online International, 22.8.11: Euro Bonds Would Cost Germany Billions http://www.spiegel.de/international/germany/0,1518,781524,00.html

---