Germany wants Greece to stay in the euro: ministry

12th September 2011, Comments 0 comments

Germany is keen for Greece to remain in the eurozone despite its debt problems, an economy ministry spokesman said Monday, as rumours that Athens could be forced to exit hit markets.

But the outcome of the latest audit of Greek finances and progress on reforms by the European Union, European Central Bank and International Monetary fund will be crucial, Germany signalled.

"Our common goal is the stability of the euro and we want Greece to stay in the euro," a spokesman for Economy Minister Philip Roesler, who is also Germany's vice chancellor, told a regular government news conference.

At the same press briefing, a spokesman for Chancellor Angela Merkel said that Germany "assumes that Greece is doing everything it can" to implement strict austerity measures to battle its deficit woes.

"Our goal is quite clear: We want to stabilise the eurozone as a whole," Steffen Seibert said.

The comments came after a series of senior officials including Roesler raised the previously taboo subject of an "orderly default" of Greece, with some considering the possibility that Athens might be forced to leave the zone.

The so-called troika of officials from the EU, ECB and IMF is the only body mandated to judge the extent of Greece's debt crisis, Seibert said.

Their report and their report only would be "the basis for assessing our future position," he said.

The auditors cut short their work, saying Greece had more work to do, but some EU sources said they were concerned that Greece had fallen behind on its promises, notably over privatisation.

Greece announced on Sunday about two billion euros in new budget cuts demanded by the EU and the IMF for its rescue package, as the troika prepared to travel back to Greece to continue its assessment.

German officials from Merkel downwards have insisted that Greece fulfil its international commitments before receiving the next slice of aid under the first rescue last year.

Seibert added: "Our line on Greece is clear: We will help, but only under strict conditions."

If Greece is not able to live up to its commitments, "then the next tranche cannot be paid. That is quasi-automatic," he said.

Greece is also waiting for the EU to approve a second rescue.

A raft of comments from German policymakers about a possible "orderly default" for Greece drove the euro to 10-year low points and German bond yields down to a record low level as investors piled out of risky assets.

Also fuelling financial market fears was an article in Der Spiegel news weekly reporting that Finance Minister Wolfgang Schaeuble doubted that Greece can avoid a default.

Seibert reiterated that Berlin did not see so-called eurobonds, common bonds guaranteed by the entire eurozone that would reduce borrowing rates for weaker states, as the right answer to the crisis.

"The government's position in refusing eurobonds has not changed," he said.

© 2011 AFP

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