Germany can't turn back when euro threatened: Merkel

MUNICH, Germany (Reuters) - Chancellor Angela Merkel said in a newspaper interview late on Friday the stability of the euro zone is in Germany's fundamental interests and Europe's largest country could not turn a blind eye to its problems.

In the interview in the Sueddeutsche Zeitung obtained in Munich on Friday evening, Merkel also denied charges by the opposition in Germany -- and commentators outside the country -- that she made the aid package for Greece more expensive than necessary by waiting too long to back a rescue package.

Merkel said the long-term stability of the euro depends on political convergence.

"We're talking about the responsibility in Europe for the euro, which is an important part of the foundation of our prosperity," said Merkel, who has faced scepticism in the German public and even in her own coalition for backing Greek aid.

"That's why now, when the stability of the euro is threatened, we can't steal away from our responsibility. It would not be in Germany's own interests."

Merkel added guarantees for Greece were designed to ensure the common currency remains stable. She rejected suggestions that Germany was making funds available for Greece while saying there is no money for tax cuts promised in the election.

"That's drawing the wrong connection," Merkel said. "With our guarantee package from the entire euro zone for Greece we're now ensuring that the common currency remains stable," she said.

"There are strict economic and legal preconditions for that," she added. "And that's how we'll protect people's money."

Merkel said she high budget deficits in Europe in the wake of the financial crisis were understandably a cause for concern for many German citizens.

"There's the completely understandable concern (among the people in Germany) about the euro -- especially in view of the giant budget deficits that have piled up in Europe through the battle against the financial crisis," she said.

"Europe has to get its public budgets in order again in the years ahead and reduce debt," she said.

Merkel dismissed criticism that she had acted too late to help Greece, as the opposition in Germany has charged.

"That's the right of the opposition but it misses the point," she said. "I made decisions that I considered to be correct from a legal and economic point of view. That's why in Greece's case what was at stake was tackling the roots of the problem -- the high deficits and the lacking competitiveness."

She said the IMF played an important role with that issue

"I will do everything exactly the same with every future decision," she said.

Merkel also repeated her view that she has full confidence in the European Central Bank.

"We all know: if the euro fails, then a lot more will fail," she said. "In the long run, we'll only be able to secure the stability of the euro if there is a convergence of financial policies in Europe."

(Reporting by Ayhan Uyanik in Munich; Writing by Erik Kirschbaum in Berlin; Editing by James Dalgleish)