Berlin : Greece should turn to the International Monetary Fund (IMF) if it needs aid, the chief finance spokesman for German Chancellor Angela Merkel's party said, in a reversal that signals a rift with European leaders Jean-Claude Trichet, Jean-Claude Juncker and Nicolas Sarkozy.
"We have to think about who has the instruments to push for Greece to restore its capital-markets access" if ultimately needed, Michael Meister, a lawmaker with Merkel's Christian Democratic Union, said in an interview in Berlin. "Nobody apart from the IMF has these instruments." Attempting a Greek rescue without the IMF "would be a very daring experiment."
The German shift underscores Merkel's attempts to steer clear of any commitment to a Greek bailout and risks scuttling European Union efforts to establish a contingency plan for the debt-strapped nation. Merkel used a budget speech yesterday to caution against any "overly hasty" pledges of financial aid for Greece, as Prime Minister George Papandreou kept alive the possibility of requesting IMF help.
The euro weakened against the dollar and the yen for a second day, falling to $1.3669 per dollar in Berlin from $1.3738 on Wednesday morning in New York.
Keeping options open
While preferring an EU solution, Greece will keep "all options open" as long as the government is forced to borrow "at an unreasonably high interest rate," Papandreou said at a press conference in Brussels with European Commission President Jose Barroso late on Wednesday. Greece may seek IMF aid over the April 2 to April 4 Easter weekend, Dow Jones reported, citing a senior Greek official it didn't name.
EU leaders on February 11 pledged coordinated action to safeguard financial stability in the euro area, yet they've stopped short of spelling out aid plans for Greece. Juncker said March 15 that the euro-area group of finance ministers he heads "clarified the technical arrangements" to enable action.
"The problem has to be solved from the Greek side and everything that is being considered has to be oriented in that direction," Merkel told lawmakers in Berlin during a debate on the 2010 budget. "There's no alternative" to the Greek government's measures to cut the deficit, she said. Merkel was speaking as the EU warned that a dozen member governments, Germany among them, risk missing their deficit targets. Papandreou, whose government has pledged to narrow the euro region's biggest budget deficit, meanwhile failed to win a commitment from Barroso on a timetable for EU leaders to agree on the specifics of aid for Greece.
EU summit
"I'm not going to speculate now about dates," Barroso said. Germany expects no decisions on aid to be made by EU leaders meeting for a March 25-26 summit in Brussels, Merkel's chief spokesman, Ulrich Wilhelm, told reporters on Wednesday.
A majority in the Dutch parliament opposes providing a loan to Greece and instead believes the Greek government should turn to the IMF for aid, Dutch newspaper Het Financieele Dagblad reported yesterday.
Greece still needs to raise about half the 20 billion euros (Dh101.1 billion) of bonds maturing by the end of May and Papandreou has called on the EU to spell out how the mechanism would work to help Greece fend off "speculators" who have driven up the country's borrowing costs.
"If the spread does not narrow ahead of the redemption of an 8.2 billion-euro Greek bond on April 20, Greece may ask for financial support," Holger Schmieding, chief European economist at Bank of America-Merrill Lynch in London, said in a note to investors.
Merkel is showing reluctance to comply as support for her coalition dips in the polls. While French President Sarkozy told Papandreou on March 8 that "we have measures, we are ready, we are determined," German Foreign Minister Guido Westerwelle, who leads Merkel's Free Democratic Party junior coalition partner, said seven days later that the Greek government can't receive a "blank cheque" from European governments.
"Greece is a member of the IMF and should avail itself of IMF aid first," Frank Schaeffler, deputy finance spokesman in parliament for the Free Democrats, said in an interview on Wednesday. "I think this is the right instrument but it's the Greeks who hold the key to it."
