GREEK PREMIER George Papandreou appealed for EU support to help ease a crippling interest bill on its rising national debt as European Commission president José Manuel Barroso said the union’s executive was “ready” to introduce a rescue mechanism if needed.
As they met in Brussels, however, German chancellor Angela Merkel sought to puncture the urgency of the Greek debt crisis by dismissing the need for “a quick act of solidarity”.
Her remarks in parliament came only two days after euro zone finance ministers reached agreement in principle to organise emergency bilateral loans for Greece should the need arise.
With the power to approve any package in the gift of EU leaders, Dr Merkel’s stance reflects strong opposition to any Greek bailout within her own administration and among the German public.
Although the Greek debt crisis will inevitably surface at an EU summit this day week, the chancellor’s position suggests that an intervention is far from a done deal.
In a further sign that Germany is lukewarm on any EU rescue, the chief spokesman for Dr Merkel’s party suggested Greece should turn to the International Monetary Fund (IMF) if it needs help.
Such a stance is at odds with the thrust of last month’s pledge by EU leaders to intervene “if needed”.
As preparations for next week’s summit advance, talks on Greece’s position are set to intensify.
Still unresolved is the timing, interest rate, term and triggering mechanism for any special loans to Greece.
Responding to reporters’ questions last evening, neither Mr Papandreou nor Mr Barroso would be drawn on the timing of any decision to intervene.
Yet both leaders implied a certain urgency, with Mr Papandreou saying it remained open to his administration to tap the IMF for aid if such a requirement arose.
Stating that his austerity programme was ahead of target with the bulk of the enabling legislation already enacted, he said an interest rate in excess of 6 per cent on his country’s national debt raised serious “ethical” issues at a time when he was cutting public sector wages.
“If we are borrowing very high rates, there are other options. Nothing is excluded, but we’d prefer a European solution,” the prime minister said.
Although Mr Barroso stressed that Mr Papandreou did not ask for financial assistance, he said preparatory work within the EU executive was complete.
“We are working for this kind of mechanism. The European Commission is ready if needed to have such a European mechanism.
“We don’t know if it will be needed, but we are ready. The work is done.”
Dr Merkel said the euro is facing its “strongest” challenge, adding that the solution to the problem could only be found in the long-term stability of the currency.
“A quick act of solidarity is definitely not the right answer. Rather, the right answer is to seize the problem at the roots ... therefore there is no alternative to the Greek savings programme.”
