Merkel defends taking time over Greece

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Chancellor Angela Merkel hit out on Wednesday at accusations of foot-dragging over Greece, saying the EU's future and Germany's role in it were "at a crossroads" and that the bloc's rules had to be changed.

"We would never have got the necessary programme from Athens if Germany had approved the aid earlier without sufficient guarantees, as nearly everyone was demanding," Merkel said in parliament.

"A good European is not necessarily the one who helps quickly. Much more it is someone who sticks to European treaties and national laws and who makes sure that the stability of the eurozone and of all of Europe sustains no damage."

Acting otherwise "would have raised expectations that highly indebted eurozone members could count on swift and generous help without austerity measures of their own," she said, in a clear reference to Spain and Portugal.

Germany, the biggest eurozone provider to an 110-billion-euro (143-billion-dollar) Greek bail-out with 22.4 billion euros, was accused at home and abroad of exacerbating the crisis by not agreeing sooner.

"You drifted around like a windsock. Then in retrospect you call that your strategy," Frank-Walter Steinmeier, parliamentary head of the opposition Social Democrats (SPD), told Merkel in parliament on Wednesday.

"Your double game has cost us an enormous amount of trust and respect in Europe," said Steinmeier, who until last year was foreign minister.

Merkel was speaking as special legislation needed before the aid can be disbursed got its first reading with the aim of it hitting the statute books on Friday. It may then be challenged in Germany's top court.

Facing strong voter opposition -- not in parliament, which is expected to approve the bill despite grumblings from the SPD -- Merkel said the European Union's future and Germany's role in the 27-nation bloc was on the line.

"The future of Europe and the future of Germany within Europe is at stake," she told lawmakers. "We are defending our currency."

Merkel faces a key election on Sunday in Germany's most populous state that could see her coalition lose its majority in the Bundesrat upper house.

A new poll published on Wednesday showed support for Merkel's conservatives slipping two points at the national level to 34 percent at the expense of the SPD and the Greens.

Her coalition partners, the Free Democrats, were stuck on just eight percent.

Forty-eight percent of voters are dissatisfied with her performance over Greece, the poll in Stern magazine said.

But she said that the union's rules on member states' budget deficits and national debt, the EU Stability and Growth Pact, had to be reformed -- a position shared by France and the Netherlands among others.

"The task of my government, and all members of this house today, is to make sure that this stability pact is adhered to, to defend it and to further develop it, as a lesson of this crisis," Merkel said.

She said that this should involve tougher penalties against member states that break the rules, suggesting that Germany was ready to face objections from its EU partners.

"We are at a crossroads. The Greek crisis has brought it home to us in drastic fashion what a lackadaisical budget and financial policy can lead to," she added.

"Just as the government of Helmut Kohl had to overcome strong resistance in 1997, our political generation also has to overcome strong resistance today. Germany, as Europe's biggest economic power, has a special responsibility."

Axel Weber, head of the German central bank, the Bundesbank, told parliament he supported changes.

The original EU rules on members' public finances were proposed by Germany under former chancellor Kohl to avert a Greece-style crisis, as a price for the country giving up its beloved deutschmark.

But immediate and tough penalties demanded by Germany for breaches of budget discipline were watered down by other future members of the eurozone as being too rigorous.

© 2010 AFP

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