Merkel ups heat on Greece, rebuffs Brussels

23rd November 2011, Comments 0 comments

German Chancellor Angela Merkel stepped up the pressure on Greece on Wednesday to commit to reforms, and held to her tough stance against European Commission proposals to introduce eurobonds.

In a wide-ranging speech in the Bundestag lower house of parliament, Merkel said: "The Greek question has still not been cleared up because we have not seen the criteria met for the payment of the next tranche" of bailout loans.

Greece needs an eight-billion-euro ($11-billion) pay-out by December 15 to avoid bankruptcy but the conservative group in the three-party unity government has refused to sign a reform pledge the EU says is needed for the funds.

"We need not only the signature of the Greek prime minister, but also the signatures of the parties that have formed a government in Greece, otherwise there can be no payment of the next tranche," said the chancellor.

And Merkel persisted with her firm veto on allowing the ECB to step up its purchase of the bonds of distressed eurozone nations, insisting on the independence of the central bank and its sole mandate -- to fight inflation.

"The economic and monetary union is based on a central bank which has as its sole responsibility the maintaining of price stability," stressed Merkel.

"That is its mandate, it is carrying it out ... and I am firmly of the opinion that this mandate should not, absolutely not, be changed," added the chancellor to loud applause.

Merkel also took aim at the European Commission, which is preparing to launch proposals for eurobonds, which many believe could be an effective response to the eurozone debt crisis.

She said she found it "extremely worrying" and "inappropriate" that Brussels was publishing its eurobond proposal as if what she called the weaknesses of the eurozone framework could be solved by pooling eurozone debt.

"This will not work," she said.

Later Wednesday, Commission President Jose Manuel Barroso will unveil a radical set of reforms designed to toughen the policing of member states' budgets, laying the ground for the potential introduction of eurobonds.

However, Germany fears its ultra-low borrowing costs would rise sharply if its debt were pooled with other, less fiscally solid countries such as Italy, Spain and Greece.

© 2011 AFP

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