Minister: Germany Won't Give One Cent in Aid to Greece

Friday, 05 Mar 2010 07:22 AM

 

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Germany has no intention of offering Greece a single cent in aid, Economy Minister Rainer Bruederle said just hours before Greek Prime Minister George Papandreou was due to land in Berlin.

Papandreou will hold talks with Chancellor Angela Merkel later on Friday to seek support from the leader of the euro zone's biggest economy in his struggle to tackle his country's debt crisis.

"The German government does not intend to give a cent," said Bruederle, a member of the Free Democrats (FDP) who share power with Merkel's conservatives.

The FDP has led government resistance to aid for Athens.

Each EU state was responsible for its own affairs and Athens had to implement its austerity plan effectively, he added.

Greece drew strong demand for a bond issue on Thursday, just one day after his government unveiled a 4.8 billion-euro package of additional austerity measures.

The 5 billion euro 10-year syndicated bond was more than three times oversubscribed at a price of about 6.4 percent — twice what Berlin pays, according to banking sources.

But markets are still nervous about the prospect of a Greek bankruptcy and the impact on the euro zone, while a poll by Public Issue for Skai TV showed a large majority of Greeks opposed the measures.

Greece's main private and public sector unions have called a 3-hour strike for Friday, when parliament will enact the latest package under an emergency procedure.

Merkel, along with the European Commission, European Central Bank and other EU governments, has welcomed Greece's plans, but has also said financial aid will not be on the table on Friday.

Most Germans oppose the idea of taxpayers bailing out Greeks who they think have been living beyond their means for years.

The German government's cautious approach, and hostility from the FDP, has stoked tensions between the two nations. Some Greek lawmakers have even demanded Germans pay reparations for the Nazi occupation during World War Two.

However, leaving Greece to fend for itself risks unnerving markets further. Athens's troubles could then spread to other euro zone states such as Spain or Portugal — a scenario that would deepen the crisis in the euro zone.

European government sources have said Germany and France are working on contingency plans under which state-owned financial institutions would directly purchase billions of euros in Greek bonds or offer guarantees to commercial banks that bought them.

Eurogroup Chairman Jean-Claude Juncker said euro area states would guarantee the currency zone's stability if necessary but they were unlikely to need to, given Greece's own efforts.

"Greece really has to do something. Greece is doing that now," Juncker, who meets Papandreou in Luxembourg early on Friday, told Deutschlandfunk radio.

"If all this were not to suffice, the euro zone would be ready to guarantee the financial stability of the euro area but I do not expect that to be necessary," he said.

On Sunday, Papandreou meets French President Nicolas Sarkozy before heading to the United States.

Papandreou told Germany's Frankfurter Allgemeine Zeitung he had never sought a bail out.

"We have not asked German taxpayers to pay for our pensions and holidays," he told Friday's edition of the paper. "That there is European support so that we can borrow money under better conditions. That is all we need," he added.

© 2014 Thomson/Reuters. All rights reserved.

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