Merkel CSU Ally Seehofer Rejects Barroso Rescue Fund Proposal

German Chancellor Angela Merkel’s Bavarian Christian Social Union allies rejected a proposal by European Commission President Jose Barroso to expand the euro’s bailout fund.

“The CSU will not support this,” CSU Chairman Horst Seehofer said on German ARD Television tonight. The plan “can’t seriously be wanted by anyone,” Seehofer said.

Barroso indicated on Aug. 4 that he wants more firepower for the European Financial Stability Facility, the euro area’s rescue fund. Barroso urged euro region leaders to review “all elements” of the 440 billion-euro ($626 billion) fund and the 500 billion-euro European Stability Mechanism that will replace it in mid-2013.

Seehofer said his party, one of three groups making up the German ruling coalition, won’t support any policy moves in the debt crisis that “socialize” or spread the liability for the debt of some euro region states.

To contact the reporter on this story: Brian Parkin in Berlin at bparkin@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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