Germany denies Merkel threatened to leave euro

BERLIN Sat Dec 4, 2010 8:01am EST

A teller counts euro banknotes inside a National Bank of Greece branch in Athens February 10, 2010. REUTERS/John Kolesidis

A teller counts euro banknotes inside a National Bank of Greece branch in Athens February 10, 2010.

Credit: Reuters/John Kolesidis

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BERLIN (Reuters) - Germany on Saturday categorically denied a British newspaper report that Chancellor Angela Merkel warned Berlin might leave the euro during a heated exchange at a summit of European Union leaders at the end of October.

Citing non-German government figures at the Brussels meeting, daily The Guardian said Merkel made the comments following a dispute with Greek Prime Minister George Papandreou, who it said had accused her of making "undemocratic" proposals.

"If this is the sort of club the euro is becoming, perhaps Germany should leave," it quoted Merkel as saying.

Merkel's spokesman Steffen Seibert said the report was untrue and that the chancellor had not made the remarks.

"There is nothing true about this story. The chancellor never made such a statement," he said. "And the German government is absolutely committed to the euro."

Berlin upset some European allies by insisting private creditors should share the pain of future state bailouts once a new permanent rescue mechanism for the single currency replaces the present temporary safety net from mid-2013.

Germany's tough line prompted a sell-off in debt from the likes of Ireland and Portugal, though finance ministers from the nations behind the euro agreed last weekend that some form of private sector liability must be included in the new mechanism.

Despite speculation that Germany might be better off without some of the weaker euro nations, Merkel's government has repeatedly stressed its commitment to the single currency.

Foreign Minister Guido Westerwelle told daily Berliner Zeitung that the country's prosperity was tied to the euro.

"We Germans have a massive interest in a stable euro and a healthy Europe. At the end of the day, we export more to the Netherlands than to China, more to France than the United States and more to Belgium than India," Westerwelle said.

Westerwelle added that Germany was partly to blame for the euro's woes by weakening EU budget rules in 2004-5 when Europe's largest economy breached the bloc's deficit limits.

(Reporting by Dave Graham; Editing by Alison Birrane)

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