Germany Seeks IMF Role for Greece in Reversal, Lawmaker Says

Discussion in 'Wall St. News' started by jjj1000, Mar 17, 2010.

  1. jjj1000


    March 17 (Bloomberg) -- Greece should turn to the International Monetary Fund if it needs aid, the chief finance spokesman for German Chancellor Angela Merkel’s party said, in a reversal that signals a rift with European leaders Jean-Claude Trichet, Jean-Claude Juncker and Nicolas Sarkozy.

    “We have to think about who has the instruments to push for Greece to restore its capital-markets access” if ultimately needed, Michael Meister, a lawmaker with Merkel’s Christian Democratic Union, said today in an interview in Berlin. “Nobody apart from the IMF has these instruments.” Attempting a Greek rescue “without the IMF would be a very daring experiment.”

    The German shift underscores Merkel’s attempts to steer clear of any commitment to a Greek bailout and risks scuttling European Union efforts to establish a contingency plan for the debt-strapped nation. Merkel used a budget speech in parliament in Berlin today to caution against “overly hasty” pledges of financial support.

    While EU leaders on Feb. 11 pledged coordinated action to safeguard financial stability in the euro area, they’ve yet to spell out aid plans for Greece. Juncker said March 15 that the euro-area group of finance ministers he heads “clarified the technical arrangements” to enable action.

    “The problem has to be solved from the Greek side and everything that is being considered has to be oriented in that direction,” Merkel told lawmakers. “There’s no alternative” to the Greek government’s measures to cut the deficit, she said.

    EU Warning

    Merkel was speaking as the EU warned that a dozen member governments, Germany among them, risk missing their deficit targets. Greek Prime Minister George Papandreou, whose government has pledged to narrow the euro-region’s biggest budget deficit, met with European Commission President Jose Barroso in Brussels today.

    Merkel is struggling with a euro-region aid decision for Greece as support for her coalition dips in the polls. While French President Sarkozy told Papandreou on March 8 that “we have measures, we are ready, we are determined,” German Foreign Minister Guido Westerwelle, who leads Merkel’s Free Democratic Party junior coalition partner, said seven days later that the Greek government can’t receive a “blank check” from European governments.

    “Greece is a member of the IMF and should avail itself of IMF aid first,” Frank Schaeffler, deputy finance spokesman in parliament for the Free Democrats, said in an interview. “I think this is the right instrument but it’s the Greeks who hold the key to it.”

    ‘Solve Their Problems’

    Any IMF involvement would signal an about-face from Finance Minister Wolfgang Schaeuble’s position of March 17, when the Welt am Sonntag newspaper cited him as saying that accepting IMF help would be an “admission that the euro countries can’t solve their problems by their own means.”

    Juncker, who is Luxembourg’s finance minister and prime minister, said March 5 after meeting with Papandreou that there’s a need for “technical assistance from the IMF” without the fund “taking the lead.” The previous day, European Central Bank President Trichet said “I don’t trust that it would be appropriate to have the introduction of the IMF as a supplier of help.”

    Standard & Poor’s affirmed Greece’s investment-grade BBB+ rating yesterday and dropped the country from “creditwatch negative,” saying the budget cuts “were appropriate to achieve” the goal of cutting the EU’s biggest deficit to 8.7 percent of gross domestic product this year from 12.7 percent.

    “The Germans see the same thing that all of us see: that at the end of the day, they’re going to be part of the solution and it’s going to cost them something,” said Paul Hofheinz, president of the Lisbon Council, a Brussels research group. “When push comes to shove, I don’t think anyone doubts that the Germans will be part of this settlement. But why should they play easy?”
  2. The Chermanz have spoken ! "Bitte eine Extra Wurst und Sauerkraut"...:D :D :D :D