GERMAN REACTION:GERMAN CHANCELLOR Angela Merkel has promised further decisive action to defend the euro against speculation, after months of prevarication.
The German leader said she was aware the weekend deal to shore up Greece was not enough to secure the euro, and that Germany would push for future efforts at euro-zone level. “This is a serious situation, not just in one country, but in several. We have taken a decisive step because we see that the euro zone is not yet secured,” Dr Merkel said in Berlin after talks with Canadian prime minister Stephen Harper.
Hours earlier she took a call from President Barack Obama, after which the German leader appeared open to a new EU guarantee scheme. German politicians are calling for a scheme to incorporate a “debt brake”, similar to that written into the German constitution last year.
Germany’s deputy leader Guido Westerwelle has called for structural funds to be cut off to EU member states who get themselves into debt more than 0.35 per cent of gross domestic product.
Dr Merkel declined to go into details yesterday, but said it was “important that we deal with this situation decisively but calmly”.
After months of rhetorical battles on the editorial pages of European newspapers, the German media have begun to echo what has been the thinking in other European countries for months.
The argument: that Chancellor Merkel is pursuing a Germany-first strategy over Greece that has allowed a local problem to become an increasingly expensive European problem.
Yesterday, Der Spiegel magazine suggested that Dr Merkel’s strategy in the last year represents a break with Germany’s pro-European tradition. “Europe can only be led smoothly, far smoothly than Merkel has done of late,” it said.
Dr Merkel’s strategy has also generated tension within her government, above all with her finance minister Wolfgang Schäuble. When he suggested a European version of the International Monetary Fund, Dr Merkel said she welcomed the idea, and then threw her weight behind an IMF-led rescue plan for Greece.
But Mr Schäuble’s officials have continued work on a so-called EMF, as well as a second, “Euro restructuring facility”.
A draft concept paper says the two structures would “keep a member state capable of functioning in the case of an extreme financial and economic crisis”.
It would allow the European Commission to give money directly to hard-up euro zone member states – but only if they accept tough conditions.