The World from Berlin 'The EU Has Made Things Too Easy for the Greeks'
The European Union may have a plan to save Greece should the need arise, but leaders are insisting that they will never have to use it. Still, German commentators say that the plan spells the end of the stability pact, designed to prop up Europe's common currency.
The 16-member group of European Union countries who use the euro agreed on Monday that -- if push comes to shove -- they would mobilize to help out debt-stricken Greece, a fellow euro-zone member. But by Tuesday, EU ministers were insisting that the contingency plan to rescue Athens would likely never be enacted.
Luxembourg Prime Minister Jean-Claude Juncker, who leads the euro group, said that that he had an "almost unshakeable conviction" that Greece would not need emergency aid after having launched austerity measures early this month to cut its public deficit and debt. Speaking on German public television on Tuesday, Juncker said that if the financial markets continued to speculate against Greece "in an unreasonable manner," then the euro-zone countries would be ready to provide bilateral loans to Athens.
Europe is hoping that Greece's bid to knock its deficit from 12.7 percent to 8.7 percent of gross domestic product within a year, with drastic cuts to public sector pay and tax hikes, will succeed.
On Wednesday, Chancellor Angela Merkel of Germany, the euro zone's largest economy, had stern words for Greece. Speaking in parliament she said that the euro zone had to have the option of ejecting a member if it persistently broke the fiscal rules governing the common currency. The option, which would only be used as a "last resort," should apply to countries which "again and again do not fulfil the conditions" to which members of the group are bound.
At the same time, she insisted that "no country should be left on its own" amid the crisis which has seen the euro shaken on the international currency markets. Merkel also rejected "rapid support" for Greece, saying that instead the country's problem had to be "attacked at the roots."
On Wednesday the German papers weigh in on the euro zone's pledges and most are highly critical of the plans to come to Greece's rescue.
The center-right Frankfurter Allgemeine Zeitung writes:
"The euro states have managed to break down the decisions about possible financial aid to Greece into many individual steps -- so much so that each new step is not really a surprise. Now, after the euro zone finance ministers agreed on the technical details, they were able to point out that there has not yet been a Greek request for aid -- and that the most recent step is only firming up a decision made by EU leaders a month ago."
"These declarations are not wrong. However, just like the insistence that the plan does not violate the European treaties, they conceal the crux of the matter. This is an opening of the floodgates. A foundation of the common currency, which had been contractually and consensually agreed upon, has been jettisoned. The taboo against one member state helping another has been broken. That is independent of the likely legal battles over the compatibility of the agreed solution with the treaties. The EU Stability Pact is already as good as finished. Now the 'no bailout' clause is disappearing as well."
The center-left Süddeutsche Zeitung writes:
"Europe has to be prepared to rescue Greece from bankruptcy in an emergency and to prevent other southern euro states from coming under pressure. There is already a plan prepared in Brussels for this kind of aid and the EU governments agree for the most part. It would be wrong to publicly announce this emergency aid now. Speculators should not be able to assume that the EU will open up its coffers as soon as they make a fuss. And the Greeks should also not forgo their savings measures. Furthermore, Europe should not hand over any money before it has decided how to avoid failures à la Athens in the future."
"It seems that it was the German government which put the brakes on a definitive agreement on aid in Brussels. That may appear as though the strongest EU state is refusing to live up to its responsibility. However, Germany has another responsibility: It must prevent Europe's monetary union from becoming a transfer union from those states who save to those which pursue unsound fiscal policy. That is why Finance Minister Wolfgang Schäuble is right to delay giving any money to Greece until the very last moment. Schäuble would prefer turning to the IMF rather than seeing an EU pact for Athens open the floodgates."
The conservative Die Welt writes:
"The European Union often does the wrong thing in a crisis. And that was also the case on Tuesday. Once again leading EU politicians like Luxembourg Prime Minister Jean-Claude Juncker announced support for Greece, without being particularly concrete. These nebulous promises are supposed to calm the markets. If everyone believes the EU states will come to the rescue in an emergency, then the private investors will come up with the money."
"That may be a cheap solution, when viewed superficially. The damage, however, is great. By always making implicit guarantees, politicians are risking the last bit of credibility the EU has."
"The fact that behind the scenes there has been an agreement on how to help Greece in the worst-case scenario, only makes this worse. Under the cover of bilateral aid, Brussels is planning a common and centrally coordinated provision of aid. All the euro zone states are supposed to take part. The message is clear: anyone who messes up and needs help will get it."
"It doesn't get much worse than this. The EU has made things too easy for the Greeks so far. Instead of upping the pressure on Athens, Brussels pledges the country that has racked up record debts billions in aid."
"Before the EU is transformed into a transfer union, all options compatible with the Maastricht Treaty must be exhausted. That means that Greece has to embark on the onerous path toward the IMF. The Washington institute has a lot of experience in dealing with quasi-insolvent states and would be more credible than the European Commission or the Council of Ministers in supervising whether Greece keeps to the conditions imposed."