The World from Berlin: Greece Needs 'Substance and Clarity, Not Half-Baked Ideas'

• Print
• E-Mail
• Feedback

The European Union continues insisting that it has a plan to help Greece with its abysmal debt situation should the need arise. But lacking details as to what a plan might look like, recent comments from Berlin have cast doubt on that assertion.

On Friday, government spokesman Ulrich Wilhelm said that "we haven't ruled out IMF financial assistance. This question is open." His comments confirmed statements by an anonymous Berlin official reported in the New York Times.

The apparent waffling from Berlin comes amid renewed uncertainty about the future of Greek finances. Finance ministers from those countries belonging to Europe's common currency union pledged once again on Monday evening that help was available should it become necessary. But Greece is getting nervous given the dearth of details offered by Brussels. On Thursday, Greek Prime Minister Georgios Papandreou hinted that Greece was still considering approaching the International Monetary Fund for assistance. He also urged the EU to provide details of its bailout plan at the EU summit scheduled for March 25-26.

"I think it's an opportunity to make a decision next week at the summit," he told reporters.

Despite the successful bond offering earlier this month, which generated some €5 billion in much needed cash for Athens, the country still needs to roll over a total of €53 billion in sovereign debt this year. Recent austerity measures have increased investor confidence, but the EU's hemming and hawing has not helped recently. Indeed, on Friday, European Commission President Jose Manuel Barroso told French television that what "we should have now is, as soon as possible, some kind of mechanism prepared, just in case," a comment that seemed to belie earlier pledges that a plan had been shaped.

European Economic and Monetary Affairs Commissioner Olli Rehn also urged the EU to come up with a plan. "It is important that the EU in the course of next week come to a more specific political conclusion about the European framework for coordinated and conditional action, if needed and required," he said, according to Reuters.

On Wednesday, German Chancellor Angela Merkel even went so far as to say that "we need to have an agreement in which it would be possible as a last resort to exclude a country from the euro zone if, on the long term, it repeatedly fails to fulfill the conditions." Many, though, have interpreted Merkel's comments as having been primarily for domestic consumption.

German papers on Friday take a look at the conundrum.

The left-wing daily Die Tageszeitung writes:

"A European monetary fund with severe sanctions, including the possibility of expulsion from the euro zone, would require the amendment of existing EU treaties. This fact is clear to both Merkel and (German Finance Minister Wolfgang) Schäuble, who first voiced the proposal, as well as France's Finance Minister Christine Lagarde, who fiercely opposes it."

"The latest noise is not intended as a serious contribution to the debate about the debt crisis afflicting some euro countries. Instead, it is targeted at local voters. Merkel and Schäuble aim to reassure hard-working German taxpayers that they will not have to support the lazy, sun-lounging Greeks, Spaniards, Portuguese and Italians."

"But it is no solution to let four of the eurozone countries go bankrupt. Therefore, the euro zone countries will have to agree on which bitter medicine they will swallow. Either they will resign themselves to the fact that the Washington-based International Monetary Fund has a euro zone country under surveillance. Or they will proudly boast of the strength and independence of the single European currency -- and pay the high cost of maintaining such an image."

The Financial Times Deutschland writes:

"The IMF has the expertise to deal with crises such as the Greek one. It would not interfere in the policy of the monetary union, but only in Greece's financial management. Greece does not need to fear overly strict austerity measures, as in the meantime the country has already adopted more than enough asceticism. The IMF would only boost credibility that the government will implement this program, something which is entirely in the interest of the euro zone countries."

"Berlin should thus not be forced to make a quick decision. Even worse than interference by foreign institutions would be ill-considered aid commitments. If the euro zone countries disregard the EU treaties in order to help Greece, they must realize they will have to formulate rules and procedures for future emergencies. The markets' nervous reaction to the indebtedness of individual euro countries reflects the diffuseness of EU strategy. For this reason, it is fair enough that Berlin considers the option of a controlled state insolvency."

"At the very least, Europeans should draw up binding political commitments to work on alternatives to the recent stability package -- and they should do that before making any blanket pledges of assistance to Greece. Otherwise muddling through will become the EU's standard modus operandi. And that, more than anything, will cause yet more speculation on states' insolvency."

The financial daily Handelsblatt writes:

"What is most worrying here is that no one in the German government issues an unambiguous statement on the carefully drawn-out rules of the monetary union. Where does the chancellor stand on the subject of a European monetary fund? What is now needed is substance and clarity, not half-baked ideas on expulsion from the monetary union."

"If there is any dithering, then the integrity of the monetary union will be put on the line. That would be the beginning of the end of the European vision."