Rösler tells Greeks stability crucial to calm debt turbulence

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7 Oct, 2011 Updated Fri 7 Oct 2011 17:31 CEST
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German Economy Minister Philipp Rösler called for more stability in the eurozone to deal with debt turbulence as Greece pledged to fully repay its bailout loans on Friday.

Speaking during an investment visit to Athens, Rösler said that Berlin wanted "to do everything to keep Greece in the eurozone."

"We need to come to more stability in the eurozone, so that we can send a clear signal that we are ready to fight for our common currency," Rösler told reporters on the sideline of talks between a delegation of German businessmen he had taken to Greece, and their counterparts.

"We agreed there are two main causes for the crisis: a lack of competitiveness and the high debt," said the minister, who is also Germany's vice-chancellor.

At a later press conference, he said Berlin would support Athens by founding an investment bank for business projects.

In August, Greek and German officials discussed a plan to develop some 20,000 hectares of solar power parks in a bid to export renewable energy to Germany.

Germany is also the main contributor to a €110 billion ($147 billion) EU-IMF rescue that staved off a Greek bankruptcy last May.

Athens has undertaken an unprecedented reform drive accompanied by sweeping pay and pension cuts that have sparked successive general strikes and which many Greeks argue have plunged the country into recession.

"We are very impressed by the Greek government's commitment to reform," said Rösler, who recently panicked markets by saying that Europe could no longer rule out an "orderly default" by Greece on its huge debt.

Greek Finance Minister Evangelos Venizelos told the same news conference that Athens intended to repay its loans in full.

"We need to persuade German citizens that the help given to Greece is beneficial to Germany in multiple ways. Greece will honour the help to the last euro," Venizelos said.

Battling another European financial fire on Friday, German Chancellor Angela Merkel insisted that under-pressure banks must first turn to investors for funds before appealing for national or European cash.

Speaking after a meeting with Dutch Prime Minister Mark Rutte, Merkel said, "We are being confronted with observations that banks are insufficiently capitalised ... but we must follow the advice of experts."

"If there are proposals that we need to recapitalise the banks, then we can implement these, but in a hierarchy: first the banks must try and get capital for themselves," said Merkel.

"If this is unsuccessful, then national instruments should intervene, as was the case in 2008 and 2009.

"Only if a country cannot do this with its own means, then the EFSF facility can be used as an option, but on the condition that the country undertakes its own structural reforms," added Merkel, referring to the EU's bailout fund.

She said the European Banking Authority, which is assessing the health of the continent's banks, should take the lead on deciding whether recapitalisations were required.

Merkel's comments came amid signs that France and Germany were divided on the role of the European Financial Stability Facility (EFSF) in recapitalising banks, ahead of a meeting of the two leaders on Sunday.

Paris wants banks to be able to tap the fund immediately, whereas Berlin prefers the states act.




2011/10/07 17:31

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