Euro-bonding

After the G8 summit, French President François Hollande claimed that he would "not be alone" in proposing Eurobonds at tomorrow's informal dinner of EU leaders in Brussels. But, who, exactly, are his bed fellows?

Italian Prime Minister Mario Monti is undoubtedly a supporter of Eurobonds, along with former Economy Minister Giulio Tremonti. However, Monti has also repeatedly stressed that Eurobonds should not be "an excuse to relax budget discipline". From the US, Monti said that, for the moment, he would seek a mere agreement on the "evolution towards Eurobonds." (whatever that means).

Monti is also likely to prioritise his own proposal: exempting public spending on certain "strategic" sectors from the EU's deficit and debt rules - a proposal which no doubt will rub Angela Merkel completely the wrong way. Monti is unlikely add fuel to the fire by also insisting on Eurobonds.

What about Spain, a perceived beneficiary of debt pooling? Well, Prime Minister Mariano Rajoy yesterday told reporters that, at this stage, the priorities for his government are "fiscal discipline, structural reforms and financial stability" - not Eurobonds. He added,

The most important thing is to take decisions that can be enacted in 24 hours. We can't enter debates [about the creation of Eurobonds] that can last for years. 

Quite right Rajoy. The Spanish PM will not want to take on Merkel over the proposal either - his main concern is the future of Spain's banking sector. As speculation mounts that Spain may be forced to tap the eurozone's bailout funds to deal with its banks, Don Mariano wants Germany on side.

Even the European Commission itself is saying that the time is not yet ripe for Eurobonds, instead pushing for the less controversial 'project bonds'. In an interview with the Wall Street Journal over the weekend, Commission President José Manuel Barroso said,

We think that it's only when there is an increased level of convergence and discipline that Eurobonds can appear as something credible. [Eurobonds should not be seen as] an invitation for irresponsible fiscal behavior or having some kind of moral hazard.

So who else? The Austrians, whose Finance Minister Maria Fekter said in an interview,

Growth financed by debt? Those are the recipes from the day before yesterday. The arguments that are put forward by France's new president François Hollande are nonsense and got us into this whole mess in the first place.

Or the prudent Finns? Hardly.

Well, there's one: David Cameron.

At least this time around, Cameron will not have a French President calling him an "obstinate kid" and asking him to stop interfering in eurozone politics.