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Merkel pushes IMF plan for Greece

The Local · 24 Mar 2010, 06:50

Published: 24 Mar 2010 06:50 GMT+01:00

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The plan, which is favoured by Chancellor Angela Merkel, has also begun to win over French President Nicolas Sarkozy, reports said.

The two countries are preparing a united front ahead of a crucial two-day European summit starting Thursday.

Business daily Handelsblatt cited French government sources as saying that a "compromise paper" along the IMF route was "fully underway."

Under the plan, the IMF would be the first port of call if Greece decides it needs emergency financial help, but some European countries would provide voluntary, bilateral assistance as a fallback.

Merkel expressed her own preference for this plan in a meeting late last week with members of her Christian Democrats and Bavarian sister party the Christian Social Union, various media reported.

Daily Die Welt reported Wednesday that despite her previous hard line, Merkel was in fact willing to help Greece and would present at the European meeting in Brussels a framework to help European countries in financial strife. Such help would come with strict conditions and would closely involve the IMF, the paper reported.

The long drawn out speculation is part of a cat-and-mouse game Merkel has been playing that balances the need to firmly insist Greece deal with her own problems against the sheer untenability of having a eurozone member fail.

Germany has argued that rescuing Greece now would take away the incentive for the Greek government to enact reforms to cut its huge budget deficit.

If the IMF plan goes through, it would likely be considered political victory for Merkel, who has been under intense pressure from the EU to promise emergency funding to Greece should the country ask for it.

But European Commission chief Jose Manuel Barroso said German Chancellor Angela Merkel, as a "committed European," will, "if needed, be in favour of providing financial assistance."

Story continues below…

The to-ing and fro-ing on the issue has been depressing the value of the euro, analysts have warned. On Tuesday, Stuart Bennett, an analyst at French bank Credit Agricole CIB, said "the market is positioning for the worst."

France, Italy and Spain have all called for quick joint action by Europe to fix to the Greek debt crisis.

The Local (news@thelocal.de)

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Your comments about this article

11:07 March 24, 2010 by Prufrock2010
However the bailout is structured, Greece's blackmail will have succeeded. The rest of Club Med will quickly follow suit. Soon the problem will be so vast and daunting that only Goldman Sachs will be able to bail out these profligate economies, which is probably what Goldman Sachs had in mind when it helped to engineer this disaster.
12:10 March 24, 2010 by William Thirteen
GS recommended buying the Euro as late as twelve days ago - so perhaps they have something up their sleeve!

16:56 March 24, 2010 by Prufrock2010
Don't worry, it'll never happen. Peschvogel says it's unconstitutional -- and he's never wrong.
18:16 March 24, 2010 by peschvogel
PruCock2010: I see you took your smart medicine today. Make sure you take this medicine "daily" not when you "feel" like you want. Read the directions.

Yes, the IMF cant be used unless you kick Greece out of the Euro and out of the European Union and this will never happen. Its in the Maastericht Treaty.

Euro will loose 20%-30% by August. Parity to USD in less than 12 months.
21:28 March 24, 2010 by wiseg
@peschvogel - on what grounds are you making your "prediction" ? Im curios, do you have some sort of financial-market knowledge? Have you done some sort of analyse? Not being cheeky genuinely curios...
23:01 March 24, 2010 by vjörn
the way peschvogel making comments here everyday about Germany .Not already normal for me.Must be some kinds of "depression". peschvogel need a kit kat and have a break.
23:29 March 24, 2010 by Logic Guy
Well, although I don't see Bundeskanzlerin Merkel as being the best leader for Deutschland, I am however in agreement with her on the Greece issue.

One of the resons why many nations continue to struggle and have done so for hundreds of years, is because they never learned how to achieve consistent prosperity. Yes, wealthier nations should do all that they can to help the ones that are in serious need. Nonetheless, history has clearly shown that individuals, as well as nations, will not make an effort to support themselves, as long as others are willing to provide for them.

Sure, Germany is the EU's largest economy. But it would be illogical to think that it will bailout every nation that struggles. It isn't as though Germany has money growing on trees.
23:42 March 24, 2010 by peschvogel
Let me have Nutella or Kinder Shokolade. Thats why Germany has so many fat kids. They eat this stuff like its a vegetable. Sehr Dick!
23:58 March 24, 2010 by townboy28
Ok,you mean Kinder Schokolade.
00:00 March 25, 2010 by peschvogel
Das ist richtig. Gans genau
00:05 March 25, 2010 by Prufrock2010
Blackbird, if the euro loses 20% to 30% by August, parity with the dollar should come sometime in June, as it is now at 1.35.

I'm mildly curious about your death wish for Germany and the euro. Care to explain?
00:06 March 25, 2010 by peschvogel
Weak fundementals and sovereignty risk....
00:11 March 25, 2010 by Prufrock2010
Can you cite an example of strong fundamentals and no sovereignty risk? No, I didn't think so.
00:30 March 25, 2010 by peschvogel
I am risk adverse in my portfolio and when i see the problems exasserbating in Europe, capital flight comes to mind. I am long on the Euro short just as most portfolio managers are today. The fundementals in Europe are weak mainly driven by higher taxes, lower consuption, weak demographics, lower R&D, and capital flight out of the Eurozone within the last 3 months. Simple...I can get more ROI or ROE from an investment in say real estate or corporate acquisition from China, US or S. America on a 5-yr or 10-yr hold than I can get from the same in the Eurozone economy. The Eurozone economy is a museum economy. It has very little diversification.
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