Merkel urges calm over Greece

Angela Merkel tried to calm a growing storm over euro zone crisis strategy today after the Bundesbank likened ECB bond-buying plans to a dangerous drug and a conservative ally of the German leader said Greece should leave the currency bloc by next year.

The comments, from central bank chief Jens Weidmann and a senior figure in the Bavarian Christian Social Union (CSU), Alexander Dobrindt, point to mounting unease in Germany with the policies being used to combat the three-year old debt crisis.

Domestic criticism has narrowed Ms Merkel's room for manoeuvre at a time when Greece is in dire need of more aid and policymakers are scrambling to prevent contagion from enveloping big countries like Spain and Italy.

Two days after Greek prime minister Antonis Samaras visited Berlin and made an impassioned plea for politicians there not to talk up the possibility of a Greek euro exit, Ms Merkel herself sent a warning to allies who have said the euro zone would be better off without its weakest link.

"We are in a very decisive phase in combating the euro debt crisis," Ms Merkel told public broadcaster ARD in an interview. "My plea is that everyone weigh their words very carefully."

Mr Dobrindt, whose party is preparing for a regional election in Bavaria and the federal vote next autumn, told top-selling German daily Bild he expected Greece to leave the euro zone in 2013. His comments drew a swift rebuke from foreign minister Guido Westerwelle who said "bullying" of euro members must stop.

In addition to Greece, policymakers have been sparing over European Central Bank president Mario Draghi's plans to buy up the bonds of Spain and Italy.

The ECB is assuming a greater role in the crisis while governments negotiate legal and political hurdles to coordinating a longer-term response. The bank's Italian head is expected to detail his plans after a September 6th meeting of its 23-member governing council.

Ms Merkel gave her tacit support to Mr Draghi on a trip to Canada earlier this month and reiterated in the ARD interview that she believed the ECB's policies were in line with its mandate to ensure stable prices in the bloc.

But Mr Weidmann, a former economic adviser to Ms Merkel, said in a front-page interview in influential German magazine Der Spiegel that the bond buys could violate rules against the ECB providing outright financing to governments.

"Such a policy is for me close to state financing via the printing press," Ms Weidmann told Spiegel. "In democracies, it is parliaments and not central banks that should decide on such a comprehensive pooling of risks."

Financing governments has long been a taboo for Germany. Weidmann's predecessor as Bundesbank chief, Axel Weber, quit last year in protest at the ECB's existing, but now dormant, bond-buying scheme - the Securities Markets Programme (SMP).