BERLIN (Reuters) - Greece does not need any financial support and European Union leaders should not make the question of aid for the indebted country a focus of their summit this week in Brussels, Chancellor Angela Merkel said on Sunday.
In an interview with Deutschlandfunk radio, Merkel said she feared causing turbulence in financial markets by raising “false expectations” about aid. She reiterated Greece has to sort out its own debt problems for the good of the euro single currency.
European Commission President Jose Manuel Barroso has urged EU member states to agree a standby aid package Greece at a summit in Brussels March 25-26 after Athens said it might have to turn to the IMF for help.
“There’s no looming insolvency,” Merkel said on Sunday. “I don’t believe that Greece has any acute financial needs from the European community and that’s what the Greek prime minister keeps telling me.”
Barroso said on Friday the 16 countries that share the euro should be ready to make coordinated bilateral loans to Greece to help it reduce its budget deficit and refinance its debts, which are nearing 120 percent of gross domestic product.
In a move that appeared designed to shake EU member states into action and in particular to win German backing for a rescue package, Barroso said the situation could not be allowed to be go on for much longer and action was needed rapidly.
But Merkel rejected that with unusually clear language.
“I don’t see that Greece needs money at the moment and the Greek government has confirmed that. That’s why I’d urge us not to stir up turbulence in the markets by raising false expectations for Thursday’s council meeting,” she said.
“I believe that, as long as Greece doesn’t need help, this issue doesn’t have to be at the forefront of our talks,” Merkel added. “Aid will not be on the agenda at the meeting on Thursday because Greece says itself it doesn’t need help right now.”
EU leaders are nevertheless expected to discuss the issue after Greece said it could not deliver promised deficit cuts if its borrowing costs remained so high and that it may have to seek help from the International Monetary Fund.
Some members of the euro zone believe the bloc itself should help Greece sort out its problems and see resorting to the IMF as a sign of weakness that would damage the currency union’s credibility.
Barroso did not say how much aid Greece would need but diplomatic sources put the figure at up to 22 billion euros. Athens has not requested any aid and hopes it will not need it.
But he said Greece’s situation could not be allowed to go unchecked and that EU member states must work together quickly.
Despite the EU’s verbal assurances of support, it could prove difficult for the euro zone to construct a financial safety net for its most heavily indebted member, largely because of German reluctance.
Germany is concerned that such aid could set a precedent for other euro zone members in financial difficulty. It is also worried that financial support could be challenged in the country’s Constitutional Court because EU rules expressly forbid a bailout of a single currency member by its euro zone partners. Merkel said she does not expect Greece to ask for aid.
”I’ll say it once again -- I don’t see those expectations,“ she said. ”Greece would like to have a certain clarity for an eventuality it can’t completely rule out.
“But I’ll say it again: The best solution for the euro is for Greece to resolves its problems by itself -- naturally with political support from European leaders.”
Editing by Noah Barkin