Tuesday, March 23, 2010
The Financial Times reports that Germany is not backing down from last week's tough talk about a bailout, recent charges by Greece that German banks are profiting from the crisis no doubt only making things worse.
Germany has set out three fundamental preconditions for any rescue package for Greece, including involvement of the International Monetary Fund, and a commitment by its European Union partners to tough new rules to control public debt and deficits in the eurozone – including necessary EU treaty changes.It looks like the common currency will be moving down again this week, but, over the long-term, the pain that is now being endured in Europe could prove to be quite helpful in demonstrating that the eurozone is serious about a sound currency, that is, if it survives.
A senior government official in Berlin said there would be no agreement at this week’s EU summit on a specific rescue package for the debt-strapped Greek government.
If there were to be agreement on a “mechanism” to provide such assistance, he said, it could only be triggered once Greece had exhausted its capacity to raise money on the international capital markets; the IMF had agreed to make a “substantial contribution” to a rescue package; and the EU members has agreed to negotiate new rules to prevent any reoccurrence of such a debt crisis.
The German position was revealed in response to growing pressure from the European Commission, and other EU member states, to reach agreement on the mechanics of a rescue package for Greece at the European Council meeting on Thursday and Friday.