'Detrimental to the Euro': European Central Bank Blasts Merkel on Greece
A European Central Bank board member has lashed out at German plans to seek help for Greece outside the EU. Speaking to a German newspaper, Lorenzo Bini Smaghi said anyone interested in economic and monetary stability has to be against calling in the IMF.
It is a sign of the growing chasm of opinion in Europe over how to help heavily indebted Greece. A top official at the European Central Bank has taken the unusual step of publicly criticizing the German government. Lorenzo Bini Smaghi, one of the ECB's six board members, has attacked plans to call on the International Monetary Fund to come to the aid of Greece, saying such a move could undermine Europe's common currency, the euro.
"If the IMF steps in, the image of the euro would be that of a currency that is able to survive only with the external support of an international organization," he told the influential German weekly Die Zeit, in an interview to be published on Thursday.
German Chancellor Anglea Merkel has repeatedly suggested that cash-strapped Greece turn to the IMF instead of relying on the European Union -- or other countries in the 16-member euro zone -- for financial assistance, should it become necessary. France has recently indicated that it agrees with Merkel's position. Indeed, the two big countries could push through the plan during the European Union summit on Thursday and Friday in Brussels despite deep misgivings in the rest of the 27-member bloc about allowing the IMF to dictate terms to a euro-zone country.
Speaking to Die Zeit, ECB board member Bini Smaghi warned that Europeans do not represent the majority within the IMF, and that the "US and the Asians are increasingly influential."
'Detrimental to the Stability of the Euro'
"Market reactions in the last few days have shown that resorting to the IMF can be detrimental to the stability of the euro," he said, adding that those who are interested in economic and monetary stability should be against IMF involvement.
Bini Smaghi urged Germans to support Greece as it fight to cut a swollen public deficit and huge debts. He said that Europe could not afford to see Greece go bankrupt. "The bill for Germany's and Europe's taxpayers would be far higher than if the country is given temporary financial support," the Italian told the newspaper.
The German government has long resisted the idea of providing Greece with aid and Merkel has insisted that this week's EU summit should not be dominated by the country's woes. The Greek government, however, has demanded that it be part of the agenda of the two-day meeting.
Athens has so far refrained from asking for any monetary assistance and has pushed through strict austerity measures designed to shore up the country's finances. But Greece must refinance over 50 billion in sovereign debt this year and a recent bond issue, though successful, also demonstrated that borrowing will be expensive. The EU has demanded that Greece cut its budget deficit by four percentage points to below 9 percent of GDP this year.
Stay informed with our free news services:
© SPIEGEL ONLINE 2010
All Rights Reserved
Reproduction only allowed with the permission of SPIEGELnet GmbH
Corriere della Sera
MORE FROM SPIEGEL INTERNATIONAL
German PoliticsMerkel's Moves: Power Struggles in Berlin
World War IITruth and Reconciliation: Why the War Still Haunts Europe
EnergyGreen Power: The Future of Energy
European UnionUnited Europe: A Continental Project
Climate ChangeGlobal Warming: Curbing Carbon Before It's Too Late