Nagging Greek Concerns Pressure Euro
Uncertainty about the prospect of an EU solution for Greece’s debt crisis continues to put pressure on the already troubled euro. Conflicting statements from EU leaders indicate that there is a serious political rift in the EU regarding aid to Greece. European Commission President Jose Manuel Barroso called for an EU based lending mechanism to be established at the EU summit this week. German opposition remains strong and German Chancellor Angela Merkel said in a radio interview that Greece does not have any “acute financial needs” and reiterated her opposition to any EU aid for Greece. Merkel stated, “I don’t see that Greece needs money at the moment and the Greek government has confirmed that. That’s why I’d urge us not to stir up turbulence in the markets by raising false expectations for Thursday’s council meeting. Aid will not be on the agenda at the meeting on Thursday because Greece says itself it doesn’t need help right now.” Barroso responded to Merkel’s statements in the German newspaper Handelsblatt and said it was urgent that EU members solve the Greek debt problem “regardless of the political agenda in member states”. Barroso further stated, “Securing the stability of the currency union is in Germany’s interest. I’m sure Germany will make a constructive contribution to resolving the current crisis.”
German Opposition to Aid
After Barrsos’s comments were published the Merkel’s government issued a statement saying Merkel had spoken to Greek Prime Minister George Papandreou Saturday and Papandreou told Merkel his nation does not need any help. The statement said, “The Greek prime minister reaffirmed that Greece does not need any financial assistance.” Italian Prime Minister Silvio Berlusconi, told an election rally that he is “absolutely in favour” of EU aid to Greece. Berlusconi also stated that the EU had “no reason to exist” if member nations were not ready to provide each other aid. Germany is concerned that direct EU aid could set a dangerous precedent for other EU nations in financial straits.
Greece’s Borrowing Costs High
Up to now Greece has not formally requested aid from other euro zone members and is eager to see whether current austerity measures are enough to restore confidence in the troubled nation. High borrowing costs are making it difficult for Greece to implement many budget cutting measures. Prime Minister Papandreou warned that Greece is “one step from being unable to borrow” putting the Athens government in a difficult position. All eyes will be on the EU summit this week which could determine the future of the euro.
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