Joint euro bonds unthinkable: Merkel

German Chancellor Angela Merkel likened solving Europe’s debt crisis to a marathon as she rejected joint euro-area bonds and central bank action while pushing for closer economic ties and tougher budget enforcement.

Merkel said the European Central Bank cannot be relied upon to resolve the crisis, since its statutory role is different to that of the Federal Reserve or the Bank of England. No “single stroke” will work and joint euro bonds are “unthinkable” without fiscal union, she said. Only longer-term steps toward economic union will tackle the crisis at its roots, she said.

“Marathon runners often say that a marathon gets especially tough and strenuous after about 35 kilometres,” Merkel told lower-house lawmakers in Berlin on Friday in a speech previewing a December 9 summit of European leaders. “But they also say you can last the whole course if you’re aware of the magnitude of the task from the start.”

Germany is leading a push with France for closer economic ties among euro nations allied to tougher enforcement of budget rules to counter the debt crisis now in its third year. Merkel said that she will consult with French President Nicolas Sarkozy on December 5 to coordinate their approach to next week’s summit.

Europe needs fiscal oversight that’s “binding” and includes “real automaticity” to punish states that persistently breach debt and deficit rules, Merkel said. European Union President Herman van Rompuy will make proposals on closer economic union on December 9, when Germany will push for EU treaty change, she said.

Leaders have to “overcome fundamental flaws in the construction of the euro area,” Merkel said.

“If we do this, we show that we see not only the struggle of the crisis but, above all, that we view the crisis as the turning point toward something good, a chance to turn things around,” she said.

“The lessons are very simple: Rules must be adhered to, adherence must be monitored, non-adherence must have consequences.”

As long as governments retain national control over budgets, joint euro area bonds are “unthinkable,” Merkel said.

“You have to differentiate between credible enforcement powers and joint European control over revenue and spending,” she said. “And as long as this is so, joint liability for the debt of others is unthinkable. That also takes care of the debate over so-called euro bonds for now.”