GERMAN ACTION:GERMAN OFFICIALS were last night hammering out a plan with EU partners to assist Greece if it is unable to convince markets it can save itself from default at a crucial meeting in Brussels today.
Germany admitted yesterday it was “playing through” various scenarios to aid Greece if the cash-strapped country faces default, but dismissed reports Berlin is considering a direct, bilateral bailout of Athens.
Senior government sources told The Irish Times yesterday that any bailout would happen “in concert with other EU countries, through the International Monetary Fund [IMF]”.
Speculation of a Greek bailout sent the markets soaring yesterday as euro-zone finance ministers held a conference call yesterday afternoon to agree their position.
The official German line is that it expects the Greek government to present an “ambitious” austerity programme today, obviating the need for external assistance.
“If the Greek government presents a plan that all find sustainable and substantial, then Greece comes out of a difficult financial situation, and that will not be lost on the markets and important financial institutions,” said a senior government source. “[Berlin] has no doubts about the solvency of the Greek government. Greece can finance itself without any problems, if not exactly cheaply.”
Berlin officials have yet to contradict the bailout admission to the Financial Times Deutschland yesterday by Michael Meister, an MP from German chancellor Angela Merkel’s Christian Democrats (CDU). “If Greece gets help then only under strict conditions and if Greece agrees to substantial reforms,” said Mr Meister, adding that Germany’s “biggest priority is a stable euro”.
According to another government official, Berlin is anxious to prevent “an upheaval bigger than Hypo Real Estate”, the bank Berlin rescued from failure after multibillion speculation by a Dublin subsidiary.
Berlin officials sent mixed signals yesterday on the likely outcome of today’s meeting, with one saying it was an “open question” whether a concrete package would emerge.
“No concrete measures are envisaged . . . neither is bilateral help on the agenda,” said a senior government source.
Nevertheless, Germany appears to be leading efforts to prepare a bailout plan if needed. German finance minister Wolfgang Schäuble told members of the CDU parliamentary party yesterday that there is “no alternative” to assistance.
With direct EU assistance impossible under existing treaties, one German report suggested individual member states would be asked to loan Greece money directly. But a senior CDU source contradicted these reports yesterday, telling The Irish Times that any aid, if agreed, would have to go through the IMF.
As well as listen to the Greek government’s rescue plan, leaders are to discuss the EU’s new 2020 strategy to emerge from the economic crisis.
Learning from the failed Lisbon Agenda, Berlin says it wants the EU to concentrate on “three to five concrete themes”, subject member states to more intense monitoring, and allow greater opportunities for “peer pressure” to be exerted on wayward states with unstable finances.
In Germany, measures to prevent a repeat of the current crisis could sugar-coat the bitter pill of bailing out for Greece.
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