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Germany rejects need for eurozone crisis summit

The Local · 13 Jul 2011, 14:15

Published: 13 Jul 2011 14:15 GMT+02:00

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"There are no concrete plans for such a special summit," government spokeswoman Sabine Heimbach told a regular news conference.

Calling an emergency meeting had been pushed by France and EU President Herman Van Rompuy.

"The important thing, and that is also the view of the chancellor, is that the work of the finance ministers on the Greek rescue package continue at full speed," she said.

In Brussels, diplomats had suggested that "a meeting of eurozone leaders is under consideration," while Van Rompuy said in Madrid that a summit "has not been excluded."

"No decision has been taken", Heimbach said, while acknowledging that it would be up to Van Rompuy to summon such a meeting.

German Finance Ministry spokesman Martin Kotthaus said for his part that the euro working group was hammering out a second rescue package for Greece, but noted

that Athens did not need to receive its next tranche of aid before mid-September and that there was no need for to "rush" decisions.

He also suggested Berlin would henceforth prove more flexible on how Greece might use financial help, saying it could, for example, use funds from the European Financial Stability Fund (EFSF) to buy back its bonds.

"It is already now theoretically possible for a state to receive financial aid and then to use some of this to buy back its debt," he said.

European Investment Bank (EIB) chairman Philippe Maystadt had said on Tuesday that the eurozone planned to relieve Greece's debt mountain by buying back Greek bonds at going rates on the secondary market.

Speaking on the Belgian RTL-TVI network, Maystadt, who took part in an EU finance ministers meeting in Brussels, said "measures must be taken to make Greece's debt sustainable."

"There is a proposal which is backed by the European Central Bank (ECB), by the European Commission, and which we are going to discuss, which would consist in enabling the European Financial Stability Fund to buy back Greek bonds at market rates," he said.

Eurozone finance ministers on Monday agreed to beef up the size and scope of the EFSF, a rescue fund set up in the aftermath of last year's €110-billion Greek bailout, which has a current lending capacity of €440 billion ($620 billion).

Kotthaus also said he expected private capital to participate in the second rescue package for Greece, a call long made by Germany.

He also insisted that Germany would not force the ECB into any decision on Greece, but would act "alongside" the ECB which remained "a central anchor" of the eurozone.

Germany and the ECB had previously strongly differed on whether to allow Greece to restructure its debt, with the central bank arguing that this would torpedo investor confidence not only in Greece, but in other debt-wracked eurozone countries.

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Meanwhile Jens Weidmann, the new head of the Bundesbank, Germany's central bank, warned that the current political cacophony over the debt crisis was weighing deeply on the eurozone.

"The cacophony over the past few weeks - and not only on the question of private capital participation - hasn't helped to restore confidence in the ability of politicians to solve the problem," he told the latest edition of Die Zeit weekly newspaper.

"To lift such uncertainty, eurozone countries must now, urgently, show they are capable of acting," Weidmann said.

"In the current environment, linking new aid to private sector participation (in a rescue package) presents greater risks than chances of seeing every state agree," he added.


The Local (news@thelocal.de)

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Your comments about this article

14:51 July 13, 2011 by Traveler33
Germany needs to just suck it up and keep the Euro flowing to Greece and these other country's that are in trouble. Germany is a wealthy country and the average German makes far more than the rest of the European brothers. Germans should not be opposed to spreading more of their wealth to help out the rest of the EU and to make it stronger. Germany and Europe are Socialist societies and as such, should do what they can to redistribute wealth so all countries prosper, not just Germany.
16:08 July 13, 2011 by lunchbreak
Heck, there is not crisis. Germany will pay whatever it takes no matter how much money it costs.

The poor german taxpayer - the east and now the rest of the EU. Here's hoping the average guy has some savings and very deep pockets. And forget about that new car, maybe you can find a used bike on Ebay.
17:55 July 13, 2011 by truelytrue
Comment removed by The Local for breach of our terms.
18:21 July 13, 2011 by Englishted
Munich airport will soon be full when the planes of all these countries are taken until the debt is paid back .(see other headlines)
19:17 July 13, 2011 by LiberalGuy
I have a question. What do people think will happen if the EU was suddenly abandoned? The Deutchmark and the Franc would instantly become the strongest currencies, whose value would be a lot greater than the Euro is now. That would drive down costs at the supermarket (for imported foods anyway), but it would also increase costs of exporting out of Germany, thus making German products less attractive to consumers here and abroad(ask the Irish what happened when they priced themselves out of the IT market). That would probably lead to lots of job losses (especially in the manufacturing sector) and push Germany back into a recession. Plus the tarrifs, the loss of skilled workers who would be forced to leave Germany due to the abolishment of EU labor laws, the banks making a killing on currency conversion fees. I could go on and on (I haven't even touched on the peace Europe now enjoys as a result of the union) , but I have realised in my time reading this site, that facts have no place on the comment section of The Local. The Euro is here to stay (despite the growing pains) get used to it.

For the record the public debt per capita of Greece is lower than the USA, so calm down.
19:35 July 13, 2011 by lunchbreak
Nice red herring. The debt per capita may be lower for the Greeks but they have far less prospects for paying it back than americans. Thats why the dollar has taken a nosedive.
19:56 July 13, 2011 by LiberalGuy
Actually I think the Greeks have a better chance as they are willing to do what needs to be done. The blues and reds in the USA are so far aparton everything that they have to rehash arguments about lightbulbs that was settled in 2007. Neither party can agree on anything at the moment.
20:12 July 13, 2011 by truelytrue
Comment removed by The Local for breach of our terms.
22:47 July 13, 2011 by LiberalGuy

Good points, but the market place is a lot different now than at anytime during history. 'True' Global competition, real time trades and the role of speculators in the market place, have changed the market (for better or worse) where the EU might be the best option avaliable. I don't think anyone in this country would be for continued lower wages in order to remain competetive, and besides the monetary market would have the final say on how competitive the German workplace would be. Unless Germany wanted to turn to a system similar to China's then I don't see it happening.

Europeans have been killing each other for thousadns of years, with the EU Europe has a chance to grow together.
23:39 July 13, 2011 by truelytrue
Comment removed by The Local for breach of our terms.
01:00 July 14, 2011 by lunchbreak
Sorry, the end of my post above should read - That's why the dollar has NOT taken a nosedive.
08:19 July 14, 2011 by harcourt
lunchbreak : I'm afraid you're behind the curve !!
10:03 July 14, 2011 by LiberalGuy

Very true. I just think that Europe is better with the union, though it is still quite young and there is a steep learning curve, I think it's the way of the future. I really like being able to use my Euro in Spain, Italy, and France when I need a break. Banks make way too much money off foreign conversion fees.
13:13 July 14, 2011 by harcourt
LiberalGuy :

I agree with you. Another great advantage for everybody is that one can directly compare prices of consumer goods from one Euro country to another. Before the Euro it was a nightmare.
13:45 July 14, 2011 by lunchbreak
Don't worry. When the EU falls apart money conversion will be a much simpler issue this time around. Technology will make it much quicker and easier. Our first concern should be the poor overworked and over exploited middle class which will continue to shoulder the ever heavier burden of subsidizing the rest of europe.

On a slightly different note the whole equation will change radically when the stuff hits the fan in Saudi Arabia as it is bound to do sooner or later. At that point the skyrocketing price of oil will dictate huge changes in the way Germany supports the rest of the continent.
13:59 July 14, 2011 by LiberalGuy

I don't know if this is one of the signs of the upcoming apocalypse, but I agree with you on the point of the burden on the middle class. Though I wouldn't classify it as subsidizing the rest of Europe, but subsidizing the multi national corporations.

As far as currency conversion (speaking from personal experience) there was one bank I was 'aquainted' with in Australia that made $60000 AUD a day in currnecy conversion fees alone. And it was one of the small ones.
19:58 July 14, 2011 by Jack Kerouac
"eurozone debt debt contagion"

Nice title - the debt is so huge they needed to say it twice!
20:39 July 15, 2011 by Englishted
@Jack Kerouac

Yes but the problems began in New York,New York.

Wall Street I think it was.
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