–Adds Comments From Radio Interview On Summit, Eurobond, Budget Cutting

FRANKFURT/PARIS (MNI) – The summit of EU leaders, which begins
today in Brussels, will not reach any conclusion on the proposal for a
common Eurobond, Jean-Claude Juncker, the head of the Eurogroup and
Prime Minister of Luxembourg, said in an interview with a German
newspaper.

“We will not intensively discuss the topic and won’t make any
decisions,” Juncker told the Handelsblatt. But Juncker, who floated the
proposal two weeks ago along with Italian Finance Minister Giulio
Tremonti, said he will nonetheless raise the topic of Eurobonds, because
“they would make the euro safer and more stable.”

He argued that a “homogenous, large Eurobond market with higher
liquidity would be advantageous for all euro countries. It would draw
capital from other parts of the globe to Europe, which would mean lower
interest rates for all, including Germany.”

However, Juncker added that such collective debt instruments are
not an instrument for the negligent. “Of course, Eurobonds would not be
possible without strict conditions,” he said.

In a separate interview with France’s RTL radio, Juncker explained
that his proposal for the issuance of common Eurobonds aimed at
mutualizing only “a part of national public debts” in order to lower
borrowing rates of high deficit countries, without “in any way” leading
to the same rates for all governments

“There will always be a difference between the interest rates of
France, Germany, Luxembourg, Austria and the Netherlands and the
countries, let’s say, less virtuous than ours,” he said.

The Eurobond, however, appears unlikely to win approval of EU
leaders, since it is opposed both by Germany and France, the bloc’s two
largest nations.

Juncker also told RTL that financial markets “have lost sight of
the fundamentals of Europe.” He said there is “not a euro crisis, but
there is a grave sovereign debt crisis in some countries.” The markets,
he said are focusing on the weaknesses of Europe.”

Among those weaknesses are the large debts and deficits of many EU
member states, which have been aggravated by the financial crisis and
associated recession, he said.

Junker told the radio station that “there is no alternative or
other option than the consolidation of our public finances,” especially
for countries with “unsupportable budget deficits.”

At the same time, Juncker defended as “normal and just” the
position of trade unions calling for a “more social dimension” in Europe
and warning against simultaneous austerity that would derail the
economic recovery.

Juncker said that this week’s European summit must convince markets
that “Europe’s leaders are prepared to do everything to assure financial
stability.”

The task of the leaders meeting in Brussels today and Friday is to
lay the ground for a permanent crisis mechanism to strengthen the
capacity of reaction by “all means,” he said. They must achieve a good
balance between “solidarity” and “solidity of member states,” which
includes requiring governments to do “everything” to reduce their debt.

“We are not there to give presents to bankers,” he insisted. “We
are not there to please big capital. We are there to protect the
interests of the citizens.”

Juncker declined to comment on whether Portugal would end up
seeking aid from its EU counterparts, saying leaders should not “feed
speculation” in financial markets. But he observed that Portugal was
making considerable efforts to consolidate its budget.

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