Germany May Compromise on Joint Debt

Germany may be willing to move sooner than expected to accept shared liability of euro-zone debt and would support short-term measures to deal with the acute financing problems facing some of the region's governments, German Finance Minister Wolfgang Schäuble said in an interview with The Wall Street Journal ahead of Thursday's European summit. Mr. Schäuble said Germany could agree to some form of debt mutualization as soon as Berlin is satisfied that the path toward establishing centralized European controls is irreversible. "We have to be sure that a common fiscal policy would be irreversible and well coordinated. There will be no jointly guaranteed bonds without a common fiscal policy." Such a fundamental change—in effect, a grand European bargain between Germany and other euro members—would require countries to give up a large degree of sovereignty over their budgets. Many European policy makers are asking how far Berlin is willing to go to put its financial strength at the disposal of the euro zone. "We are willing to go as far as we need to in order to get a sustainable agreement in Europe," said Mr. Schäuble, speaking in his Spartan Berlin office. His comments indicate Germany is more flexible than many observers in Europe think after Chancellor Angela Merkel told German lawmakers early this week there wouldn't be full mutualization of European debt in her lifetime. German lawmakers present said that Ms. Merkel's remark was made in jest and that media have exaggerated its significance. Mr. Schäuble's comments seem to support this view. Read more. (Subscription required.)