Germany denies pushing Portugal towards bailout
The Local · 10 Jan 2011, 07:29
Published: 10 Jan 2011 07:29 GMT+01:00
"It is not the German government's strategy to force Portugal to call for Europe's rescue fund," government spokesman Steffen Seibert told the business daily Handelsblatt on Monday.
The latest edition of weekly newsmagazine Der Spiegel had reported earlier that Berlin, along with Paris, wanted members of the 17-country eurozone to state that they are ready to do whatever it takes to save the currency union, including expanding a €750-billion ($970-billion) rescue fund.
German and French experts are worried by the high interest rates Portugal is being forced to pay in order to borrow money from investors concerned by Lisbon's public finances.
Interest rates on Portuguese debt rose sharply to record high levels on Friday - as they did for Spain.
Spain is of much greater concern to Paris and Berlin, with its economy twice that of Portugal, Greece and Ireland combined, and a banking sector struggling with bad debts while unemployment hovers at almost 20 percent.
Investors are also becoming concerned by Belgium, which has been without a government for nearly seven months.
On Wednesday, the Portuguese government is hoping to raise up to €1.25 billion through a sale of three and nine-year bonds, followed by Spain the following day.
German Finance Minister Wolfgang Schäuble and French counterpart Christine Lagarde met in Strasbourg last week and both know that convincing Portugal to seek help will not be easy, Der Spiegel reported.
Prime Minister Jose Socrates insists that that his government's austerity measures will bring Portugal's debts down.