Germany has 'right' to block Greek loans: EU

25th April 2010, Comments 0 comments

Germany will be within its rights if it chooses to block a deal for euro currency partners to bail out debt-stricken Greece alongside the IMF, the European Commission said on Sunday.

Commission officials, alongside the European Central Bank and the International Monetary Fund, are assessing Greek plans to restructure its budget and economy over the next three years in exchange for loans.

However, German Finance Minister Wolfgang Schaeuble told the mass-market Bild newspaper on Sunday that Berlin could reject the call from Athens for 30 billion euros (41 billion dollars) in loans from its 15 single currency partners.

"The fact that neither the European Union nor the German government has taken a decision means: it could be positive or negative," Schaeuble was quoted as saying.

"It depends alone on whether Greece in the coming years continues along the saving course on which it has embarked."

Foreign Minister Guido Westerwelle told the ZDF television channel meanwhile that Germany was "not ready to write a blank cheque".

The European Union executive is due to issue its opinion on Greek measures within "a matter of days," said Amadeu Altafaj Tardio, spokesman for the EU's economic and monetary affairs commissioner Olli Rehn.

But he underlined: "Any member state can block. It is their right if they still think that it's not yet needed and the financial stability of the euro area is not at stake."

The European commission and central bank will first have to say if they believe Greece's request for the loans is justified, and if it has no choice but to seek help from its European partners and the IMF.

But the final decision has to be taken unanimously among the eurozone countries, and therefore with the approval of Germany which is being called on to give the largest amount of about 8.4 billion dollars.

On Friday, German Chancellor Angela Merkel also warned that aid to Greece was not automatic and depended on Athens producing a credible savings plan and proof that eurozone stability was on the line.

"The stability of our currency is the first priority," she said.

A senior EU official suggested renewed intransigence in Berlin was more to do with May 9 elections in the North Rhine-Westphalia state, a vote that is vital for the ruling coalition.

"The election campaign can't justify anything," the official insisted. "They will have to explain their position later to their citizens if the euro area as a whole is destabilised.

"This is not and has never been only about Greece," he stressed.

"The statements of German officials on Greece are aimed mainly at their electorate," a European government official told AFP, adding: "I think that eventually Berlin will agree to hand over the aid."

"Because if Germany refuses, the markets are going to push strongly against Greece and then there will be a real crisis for the whole euro zone," she said.

Speaking in Washington, IMF managing director Dominique Strauss-Kahn said that "the IMF, the European partners, and everyone involved in the financing effort recognises the need for speed."

"I am confident that we will conclude discussions in time to meet Greece's needs," he underlined after meeting here with Greek Finance Minister George Papaconstantinou.

Europe is expected to provide Greece with about 30 billion euros in help in the first year with the remainder, about 15 billion euros, coming from the IMF.

© 2010 AFP

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