• Germany and France clash over Greek rescue package_ fin de l'Europe ?

    Germany and France clash over Greek rescue package_ fin de l'Europe ?

    source: http://business.timesonline.co.uk/tol/business/economics/article7063162.ece

    From The Times
    March 16, 2010
    Germany and France clash over Greek rescue package

    Conflict was brewing between Berlin and Paris yesterday over the crisis in the eurozone as the German Finance Minister called for countries that fail to clean up their finances to be thrown out of the single currency.

    As European finance ministers met in Brussels to agree the mechanism for a financial bailout for Greece, Wolfgang Schäuble said that the Stability and Growth Pact that governed the eurozone was not tough enough. “We need stricter rules. That means, in an extreme emergency, having the possibility of removing from the euro area a country that does not get its finances in order,” Mr Schäuble said.

    His comments were seized upon by France. Christine Lagarde, the Finance Minister, called on Berlin to increase domestic demand to stimulate economic growth in the eurozone. In an interview yesterday she criticised Germany’s huge trade surplus with other eurozone states, suggesting that it was not sustainable, and called for more convergence of eurozone economies.Ms Lagarde dismissed Mr Schäuble’s proposed European Monetary Fund — an institution that potentially would crack the whip as well as provide rescue funds for potential defaulters. She said that the project would take up to five years to conclude and instead proposed “soft” rules to improve discipline in the eurozone.

    After five hours of talks, finance ministers last night agreed the shape of a Greek rescue that could “rapidly” plug future gaps in Athens’ battle to control its badly skewed finances.
    Ministers appeared to rule out the use of loan guarantees under the terms of aid that would involve all eurozone nations but would not go public on the type or detail of any eventual aid.

    Jean-Claude Juncker, the Prime Minister of Luxembourg, said that the Greeks had not asked for aid and that ministers “still don’t think it will be necessary,” but explained that “technical preparations” would be completed over the “next few weeks”.

    The country needs to raise more than €53 billion (£48 billion) to meet public spending commitments, with more than €20 billion required within the next two months.

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