Germany warns Greece to deliver on cuts

3rd May 2010, Comments 0 comments

Germany, which would reluctantly provide the lion's share to any Greek bailout, praised Athens on Sunday for its plans to slash spending but told it to live up to its promises.

"I think that this is a very ambitious programme," Chancellor Angela Merkel, who has found herself at the sharp end of foreign criticism for dragging her feet on coming to Greece's aid, told reporters in Bonn.

"I think that (the bailout) is the only way to ensure the stability of the euro."

But her economy minister told Athens to follow through on the deep cuts it has promised in return for 110 billion euro (146 billion dollars) in loans from eurozone members and the International Monetary Fund over three years.

"Since Germany and the German people are acting for the stability of the eurozone, I expect now from the Greek government that it implements the programme of cuts that it has presented quickly, decisively and in a credible manner, to the letter," Rainer Bruederle said.

With Germany set to be the biggest contributor among eurozone nations, voters are uneasy and Merkel has had to tread carefully.

Merkel's government hopes that new legislation needed before any loans can be disbursed will become law by Friday. Her cabinet was due to prepare a bill on Monday which will get its first reading in parliament on Wednesday.

Opposition to a bailout is strong, with a new poll published on Sunday in the Bild am Sonntag newspaper showing 56 percent of people believe giving aid to Greece is wrong. Just 39 percent were in favour.

Merkel, who won a second term in September, has a key election to fight on May 9 in North Rhine-Westphalia (NRW), Germany's most populous state, which could see her governing coalition lose its majority in the upper house.

A voter survey on Sunday suggested Merkel's centre-right Christian Democrats (CDU) and her coalition partners both in NRW and nationally, the Free Democrats (FDP), would fail to win enough voters to secure a majority in the state.

It also showed 62 percent of voters were unhappy with her government.

On Sunday she attempted to soothe opposition to the bailout by saying that Germany's share of the loans would come from the state-owned development bank, the KfW, with the federal government merely providing loan guarantees.

"Of course the nature of the KfW loans is that the federal budget would have to foot the bill if the loans go bad. But on the other hand, the KfW would also earn money if Greece pays them back," she told the Bild am Sonntag.

Amid fears that Greece's crisis was spreading, Merkel predicted that the pain that Athens is going through would spur Portugal, Spain and Ireland to make the necessary spending cuts before it was too late.

"These countries can also see that the path taken by Greece with the IMF is not an easy one. As a result they will do all they can to avoid this themselves, and they have already set out saving efforts," she said.

© 2010 AFP

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