Merkel defends role in Greek crisis

22nd June 2011, Comments 0 comments

German Chancellor Angela Merkel hailed a confidence vote victory Wednesday by the Greek government as an "important step" and defended her own role in the crisis against domestic criticism.

"It is an important step and we will see the next step next week," she told parliament's foreign affairs committee, referring to a debate on budget reforms imposed by Athens's European and International Monetary Fund creditors.

She added that she had spoken to Prime Minister George Papandreou by telephone earlier Wednesday.

Her spokesman Steffen Seibert stressed that this was "not just a congratulatory call" and that the chancellor had "encouraged" Papandreou to stick with his reform plan.

But she rebuffed German deputies' accusations that she had been too lax in negotiations on roping private companies that hold Greek debt into a bailout plan.

She said firm pressure to include the private creditors was "supported by only very, very few countries: the Netherlands and in part by the Finnish."

"It was an enormous success to convince France" to back the idea of their involvement, which was adopted by eurozone finance ministers earlier this week in a heavily watered-down version of Germany's initial proposals.

In Germany, "we all want private participation but that requires some clear majorities in Europe -- we are working on getting such majorities," she said.

She warned against burdening private creditors too much, saying she "will not take responsibility" for a "contagion" to other countries resulting from moves that could be interpreted by markets and rating agencies as a default.

"We (Germany) cannot do anything that would lead to enormous dangers" for the eurozone, she said.

But German deputies, including members of the ruling centre-right coalition parties, kept up pressure for banks, insurers and pension funds to be required to pony up for fresh aid to ailing Athens.

"We cannot and must not let ourselves be taken for a ride by our European partners," MP Michael Link of the pro-business Free Democrats, junior partners in Merkel's government, told the meeting.

The Greek government pulled through a confidence vote early Wednesday, with Papandreou having called for support "to avoid bankruptcy and keep Greece in the euro core."

The prime minister was to hold an inner cabinet meeting in the afternoon to approve a law for an austerity drive worth more than 28 billion euros ($40 billion) by 2015.

The measures also include a vast privatisation programme to raise 50 billion euros, but the plan faces deep opposition from some quarters, not least from voters who have staged angry protests in recent weeks.

The European Union, which last year rescued Greece from bankruptcy with a huge loan supported by the IMF, set an ultimatum for Greece to enact the austerity and privatisation measures to qualify for an immediate lifeline of 12 billion euros under last year's 110-billion-euro rescue.

Germany is the biggest single contributor among eurozone countries to the rescue but polls indicate most voters oppose further aid for Greece.

The issue is expected to dominate an EU summit Thursday and Friday.

© 2011 AFP

0 Comments To This Article