Germany hits out at US as Greece vows action on debt

27th September 2011, Comments 0 comments

Germany told the United States Tuesday to stop pointing the finger at Europe for its own economic woes while debt-wracked Greece promised to do its utmost to avert a financial meltdown in the eurozone.

Europe's snowballing debt crisis had nothing to do with the United States, which would do better to focus on solving the very real problems of its own, said German Finance Minister Wolfgang Schaeuble.

His barbed comments were clearly aimed at US President Barack Obama who had warned a day earlier that Europe's failure to tackle crippling Greek debt was "scaring the world".

"It's always much easier to give advice to others than to decide for yourself. I am well prepared to give advice to the US government," Schaeuble said in an English-language address to the European School of Management and Technology in Berlin.

"Even if Obama is thinking the opposite, I don't think the problems of Europe are the reason for the problems of the US," he said.

Despite the sharp words, global stocks rallied for a second day running with huge advances in Europe on belief that EU and world leaders are preparing a blockbuster response to the eurozone debt crisis, traders said.

Elsewhere in the German capital, Greek Prime Minister George Papandreou insisted that Athens was pulling out all the stops to resolve the crisis and prevent it from bringing down the euro project as a whole.

"I can guarantee that Greece will live up to all its commitments. I promise you we Greeks will soon fight our way back to growth and prosperity after this period of pain," Papandreou insisted, adding that pillorying Greece would not help matters.

"If people feel only punishment and scorn, this crisis will not become an opportunity, it will become a lost cause. And we are determined to make this a success," the Greek leader said ahead of a crunch meeting with German Chancellor Angela Merkel on Tuesday evening.

Greece was making a "superhuman effort" to bring down its debt, Papandreou insisted.

Merkel, for her part, said the crisis was not a crisis in the common currency itself, but in the huge debt piles amassed by eurozone members.

"We don't have a euro crisis, but a debt crisis," Merkel said.

She and Papandreou were to meet for a working dinner later amid increasing speculation that Greece could default, with the next installment of debt aid due under its May 2010 bailout accord with the EU and IMF hanging fire as officials review the country's finances.

Athens says the aid payment, worth eight billion euros ($11 billion), is essential for it to continue paying its bills.

Chief auditors from the IMF, EU and ECB will return to Athens on Wednesday or Thursday, eurozone chief Jean-Claude Juncker told the European Parliament, nearly a month after they broke off their review of Greece's finances over reported concerns reforms were not being implemented.

In Athens, Greek Finance Minister Evangelos Venizelos insisted the payment would be made "on time" in October, repeating assurances that the country would not default.

"It will be decided in October (the release of the installment). The disbursement will be decided on time and according to our needs," Venizelos said.

Officials say Greece may announce a number of privatisation deals this week as the debt-hit country comes under increasing pressure from its creditors to meet tough fiscal targets.

Papandreou said a decision by European leaders on July 21 to expand the scope and size of the EU's rescue fund -- the European Financial Stability Fund or EFSF -- was a "step in the right direction" which would give Greece "breathing space" until urgently-needed reforms starting producing results.

Nevertheless, Germany made it clear that it was opposed to ploughing more money into the 440-billion-euro ($590 billion) EU-IMF fund, not least because that could pull fellow eurozone members into the debt vortex.

"If we increase the figure, I don't understand how anyone can have such a silly idea. The result will be that other member states will be endangering their triple-A" sovereign debt ratings, Schaeuble said.

"That doesn't work. It makes no sense."

Media reports have suggested that international rating agencies could downgrade the top-notch "AAA"-rating on German sovereign debt if the fund's ceiling is increased, because Germany, as Europe's paymaster, would have to foot most of the bill.

The German parliament is set to ratify Thursday the new EFSF powers agreed at an EU summit in July and Merkel said it was "of the utmost importance" that the legislation should pass.

© 2011 AFP

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