Germany Refuses to Help Greece Without Tougher Terms

Source:

"It depends entirely on whether Greece goes through with the strict austerity. . ."

Germany's finance minister Wolfgang Schauble has raised fresh obstacles to the €40bn Greece aid package, warning that Berlin will not transfer funds until Athens agrees to tougher terms.

Schauble said no decision had yet been made by Berlin or the EU and that the outcome may yet be "negative." "It depends entirely on whether Greece goes through with the strict austerity in coming years," he told Bild Zeitung.

George Papaconstantinou, Greece's finance minister, insisted in Washington that the Germans were "completely on board" and that other EU states and the IMF would provide a bridging loan if necessary. He said funds "will lose their shirts" if they have taken short bets on Greek debt. "I want to categorically state that any restructuring is off the table."

IMF Head Dominique Strauss-Kahn said everybody involved "recognizes the need for speed. We are all aware of the seriousness of the situation and the courageous efforts being made by the Greek people."

Schauble will meet Bundestag leaders today (Monday) amid rising doubts among Free Democrats (FDP) and Bavaria's Social Christians (CSU) over the wisdom of open-ended help.

Hermann Otto Solm, finance expert for the FDP, said Berlin must clarify the limits to any aid. "Our party is very concerned that it is not going to be a one-off rescue, but will turn into continuous, automatic help for any country that ends up like Greece. That we cannot accept," he said.

Hans-Peter Freidrich, head of the CSU group, said Greece should "seriously consider leaving the eurozone."

Italy's finance minister, Giulio Tremonti, said Germany must stop dragging its feet. "If your neighbor's house catches fire, it's not to your ¬advantage to sit back and do nothing. You cannot fool ¬yourself into thinking that just ¬because your house is bigger and more beautiful, that it won't be at risk. In case you are wondering, I am speaking about Germany," he said.

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