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Merkel talks tough on aid for Greece

AFP · 23 Apr 2010, 16:35

Published: 23 Apr 2010 16:35 GMT+02:00

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Speaking after Greece applied for up to €45 billion in emergency funds from the EU and the International Monetary Fund, Merkel said: "The stability of our currency is the first priority."

"The savings plans absolutely have to be credible," she added.

Officials need "to determine whether this is just a Greek problem or whether this is a problem for the stability of the single currency. Then we want, of course, to negotiate quickly and in determined fashion," she said.

Until such deliberations had taken place, it was not possible to talk about how much would be in any potential aid plan for Athens. "Greece must play its part in ensuring that its finances return to a solid path," Merkel said.

Eurozone ministers have prepared the outlines of a package of €30 billion in 36-month loans for this year at a rate of around 5 percent if needed.

The IMF could contribute another €10 billion or €15 billion.

As Europe's top economy, Germany would have to dig deeper than any other country, with Michael Offer, a spokesman for the finance minister, saying Berlin would have to stump up some €8.4 billion if the package goes ahead.

The issue is not without political ramifications in Germany as well, with a key regional election looming on May 9. Opinion surveys have shown that bailing out Greece is unpopular with the voters.

Any loans would also have to be agreed by both houses of parliament while at the same time, there are concerns that Germany might have to pay even more.

Frank Schäffler, the fiscal expert of the pro-business FDP party, the junior partner in Merkel's governing coalition, said Germany might have to stump up as much as 30 billion euros by 2012.

"Greece is a bottomless pit," the outspoken Schäffler, who previously suggested Greece should sell some of its islands to raise cash, told mass circulation daily Bild on Friday.

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There are also concerns that a legal challenge to the aid could be mounted in the German constitutional court.

Perhaps with these worries in mind, Germany has appeared more reluctant than other countries to rush to Greece's aid in the immediate wake of Athens' appeal.

"Such an intervention would only be possible if there were an extreme need," said Merkel. "We have known for some time that Greek public finances are in a difficult situation."

With Germany's own public finances under pressure, Merkel was at pains to point out that any funds to Greece would come not from state coffers, but from the country's development bank KfW, backed by government guarantees.

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Your comments about this article

18:34 April 23, 2010 by Prufrock2010
I think Germany should go back to the D Mark and let Greece look elsewhere for suckers to bail it out of a disaster of its own making.
20:01 April 23, 2010 by wmm208
And i think PruCock2010 should not be allowed to be finanze minister or have anything to do with financial decisions, government policy or strategy for anyone or anybody. Germany cant exit. It would break the law of the Maasterich Treaty. You wouldnt want to become a criminal now? Prudently stated...Greece is just the deposit. The Interest Payments will be Portugal and the Prinicpal Payments will be Italy and Spain. The fun begins....

Ne supra crepidam sutor iudicaret....

Put that in your google! umph
00:02 April 24, 2010 by Prufrock2010
Peschvogel strikes again. Schade....

Jesus Christ!
02:47 April 24, 2010 by wmm208
Germany will pay, pay, pay and pay for their United States of Europe. Dont forget to ask for the zahlen bitte!
13:48 April 24, 2010 by Bushdiver
I agree with Prufrock2010. Let's go back to real money (D-Mark). I'm wondering how the Germans are going to come up with the 8 plus billion euros to loan Greece. Forgot, we are in Germany so they will probably come up with some new tax or tax increase. We're still paying for East Germany which should have ended years ago but the German Government isn't so quick to end a tax once it has been placed into effect.
14:14 April 24, 2010 by Bensonradar
It's common knowledge that Greece has lived beyond its means. Their public service sector was a running joke, with civil servants running private businesses. Their middle classes turned tax evasion into an art form.

They have nobody to blame but themselves. The previous government hid the deficit, so George Papandreou's incoming administration were caught out.

Moody's downgraded the country's bonds to A3 status, four notches above junk. The cost of insuring Greek debt (CDS) jumped 565 basis points, reaching 200 points above that of Iraqi debt.

But loaning them more money means they have to pay that back as well. Without a strong tax and internal fiscal policy, how are they going to pay it back?

Greece's debt will never end. Mark my words. Then the UK, then Spain etc etc.
18:58 April 24, 2010 by wmm208
Bushdiver: Yes, expect higher taxes. No more talk of the DM. That time has passed. Its about EU unity. Greece is our brothers. Spain, Portugal, Italy will need the help as well. Remember, Moody's ratings doesnt mean anything anymore or else everyone in Europe will be downgraded soon. Its a matter of helping and reaching deep down into our pensions, our parents pensions and helping the Greeks. As unpopular as the situation has become, we need to be a "united" Europe. Like USA. Forget we are Germans or they are Greeks or they are Portugese. We are all one. Their problems are ours and our problems are theirs. Let us become a brotherhood. Bring back the Roman Empire agenda. Its in our future's best interests or we will pay for an EU failure to unite tax as well. The DM is no more. We decided one way on the EURO motorway when it came to a fork in the road and we cant look back. We need to stop complaining and start paying....
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