Economy

Germany insists on tough conditions for Greek aid

A woman walks past a defunct restaurant with a `for sale' sign in its windows in central Athens on Wednesday, April 21, 2010.

A woman walks past a defunct restaurant with a `for sale' sign in its windows in central Athens on Wednesday, April 21, 2010.  

German Foreign Minister Guido Westerwelle on Monday insisted that Greece had to enforce further cuts to its deficit to deserve aid from the euro-zone, despite calls from his Italian and Spanish counterparts for quick approval of the aid.

Greece is seeking a 30—billion—euro (45—billion—dollar) loan package from its euro-zone partners, to help it face a mounting debt burden that is made worse by rising risk premiums on its government bonds.

But despite the package having been already approved by euro area finance ministers, German officials have warned that its activation is not a foregone conclusion.

“First of all, Greece has to do its homework,” Westerwelle said in Luxembourg, where he was set to meet his European Union counterparts.

The leader of Germany’s liberal Free Democrats (FDP), who has often spoken against a bail—out for Greece, said Athens had to agree a “concrete package” of fresh cuts with the International Monetary Fund (IMF) before euro loans were given.

The IMF — which is set to add 10 billion euros to the eurozone’s rescue mechanism — has been in talks with Greek officials since last week, along with European Commission and European Central Bank (ECB) experts.

Mr. Westerwelle, whose party is facing a difficult test in forthcoming regional elections, said “it cannot be serious to expect the European taxpayer to make up for the erratic behaviour of single countries.” He also stressed that “the German government has not decided yet” on the loan for Greece, to which it would contribute with 8.4 billion euros, the largest share of all euro-zone countries.

Italy’s Foreign Minister Franco Frattini has declared himself “worried by some of the rigidities Germany has shown,” and emphasized that helping Greece was necessary to maintain confidence in the whole of the euro-zone, preventing speculative attacks on other countries with large deficits, such as Portugal.

Mr. Frattini warned that Germany’s resistance on the Greek aid might warrant an EU summit on the issue, risking a delay in agreement on disbursement of the loan.

Spanish Foreign Minister Miguel Angel Moratinos meanwhile vowed that the EU would “continue to express solidarity towards Greece,” and said that would “obviously include France and Germany.” He also said the euro-zone loans would “give a satisfactory answer to the serious situation Greece is going through,” and expressed hope they could be released “quickly.”

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Printable version | Apr 10, 2020 3:23:54 AM | https://www.thehindu.com/business/Economy/Germany-insists-on-tough-conditions-for-Greek-aid/article16372582.ece

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