Speaking after a video conference of EU leaders on setting up a joint fund to avert an economic collapse in parts of the 27-member bloc, Ms Merkel said leaders agreed on the need for a fund but disagreed on details.
A joint solution is in Germany’s interests because things can only go well for Germany if they go well for Europe
She said: “It was clear to everyone that we need such a recovery fund.
“I want to say very clearly that such a joint solution is in Germany’s interests, because things can only go well for Germany if they go well for Europe.”
But there are fears in Berlin that the EU member states hit hardest by the pandemic – Italy, Spain and France – are plotting form some sort of alliance of their and Ms Merkel knows there is a lot at stake for German taxpayers.
Italy, Spain and France are pushing for so-called “eurobonds” or “coronabonds” which would essentially mean common and unlimited debts across the bloc.
Ms Merkel restated her opposition to such a solution, warning Germany would have to make higher contributions to the future EU budget and could end up forking out a high three-digit billion sum.
She said: “It is not acceptable that debts are mutualised.”
Ms Merkel, along with the leaders of Finland, the Netherlands and Austria, are more keen on loans where each country has limited liability.
But some senior Brussels diplomats expect more pressure from Rome, Madrid and Paris in the coming weeks.
One senior EU insider said: “There are fears in several EU countries that Paris, Rome and Madrid are concocting something and will attack together.”
European Central Bank Governor Christine Lagarde warned leaders the pandemic could cost them up to 15 percent of their economic output.
Ms Merkel said: “We were all agreed that this wasn’t about 50 billion euros.
“I said only that it wouldn’t be good if one simply announced the size – you have to justify it. That was the spirit in which I was speaking.”
Asked about the amount under discussion, she said she had mentioned a trillion euros only in the context of working out the size of any economic programme needed.
She said: “That’s why we have asked the Commission to make proposals to us, assessing the individual sectors and working out how much damage they will suffer.”
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Ms Merkel said all the elements of a package had to be put in place during May and be ready by June 1.
She acknowledged differences between countries but said the atmosphere of talks had been good.
She said: “We weren’t always in agreement, for example on whether that should be done in the form of grants or credits or how it should be implemented, but we all agreed that this recovery fund had to be closely linked to the next medium term financial framework.”
There are also growing concerns in Germany about how the money will be distributed and fears European crime gangs could be waiting to line their pokets with some of the vast sums of money under discussion.
CSU MEP Monika Hohlmeier, chair of the budgetary control committee in the EU parliament, has urged officials to ensure systems are in place to control the payments.
She said: “Where more money is spent and the political pressure to act quickly is great, the risk of abuse increases.
“Italy faces a special challenge. Organised crime is so deeply rooted there that it will be a daunting task, especially in the south of the country, to prevent money from flowing to organised criminals.
“We in Germany are also not immune to criminals and corruption.”
(Additional reporting by Monika Pallenberg)
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