Bailout for Greece just a 'last resort,' Germany says

AFP - [email protected] • 12 Apr, 2010 Updated Mon 12 Apr 2010 14:02 CEST
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A bailout for debt-laden Greece remains a "last resort" and an agreement by eurozone finance ministers on the modalities of possible assistance is hypothetical, Germany said on Monday.


"Greece has itself clearly let it be known that the time for an 'ultima ratio' has not yet been reached," Chancellor Angela Merkel's spokesman Christoph Steegmans told a regular briefing in Berlin. "The fact that a fire extinguisher has been mounted on the wall does not mean that it will be used."

Michael Offer, a German finance ministry spokesman, added: "Most fire extinguishers just get refilled after one or two years and nothing happens."

Steegmans said that any bailout would not be automatic following Sunday's talks, but that it would first have to be agreed at an EU summit.

Finance ministers from the 16 countries using the euro single currency agreed in a conference call on Sunday on the details of a possible aid package to Greece worth €30 billion this year.

Europe's biggest economy Germany would provide in theory around €8.4 billion, but according to Offer, there is strong opposition among voters to any bailout for Greece.

Several German newspapers on Monday attacked Merkel over Sunday's agreement, with the Handelsblatt business daily saying that Berlin's tough position was now "history."

Berlin also defended the interest rate of around five percent agreed on any three-year loan to Greece - well below the rates that Athens currently pays when it borrows on capital markets.

"It is still well above Germany's refinancing rate, and clearly higher than that of all eurozone member states. It would also be much higher than on any IMF loan," Offer said. "If you look at Greece, then the average rate of interest in the past few months has been around 5.5 percent, for three-year bonds anyway. This confirms that the interest rate of roundabout five percent is roughly at market level."

He added that Germany "of course shared the opinion of Mr. (Luxembourg Prime Minister Jean-Claude) Juncker, who said this morning that the rate of interest was not subsidised."



AFP 2010/04/12 14:02

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