* ECB’s Trichet: conditional loan only way to help Greece
* Says euro zone membership not ‘a la carte’
* Weber urges struggling countries to bite reform bullet
BRUSSELS, March 22 (Reuters) - Aid to Greece can only take the form of a loan with very strict conditions, European Central Bank President Jean-Claude Trichet said on Monday.
In his most specific comments yet on support for Greece, Trichet said that aid should be given only if there was a serious need which threatened the euro zone as a whole.
“We can only be talking about a loan without any subsidy element. That needs to be extremely clear,” he told a European Parliament committee.
“That loan is the only possibility in our view.”
Trichet also left the door open for the ECB to accept lower-rated Greek bonds as security against loans if the country is downgraded again, while dismissing the prospect of any country leaving the euro zone.
“The euro area is not a la carte. We enter into the euro area to share a destiny in common,” he said.
European Commission President Jose Manuel Barroso has proposed EU leaders agree a stand-by financial aid package at a summit this week and Athens has said it could turn to the IMF for help if the 16-country region does not come up with a plan. [ID:nLDE62L0HG]
Trichet said the ECB assumed markets and ratings agencies would progressively recognise the importance of Greece’s “convincing and courageous” deficit-cutting measures.
Asked about the ECB’s plans to raise the threshold for accepting bonds as loan security at the end of the year, he left room to extend the easier rules if Greece’s debt is then rated below the A- benchmark by all three ratings agencies.
“My working assumption is that ... there would not be a downgrading of the signature of Greece,” Trichet said.
“If it would appear that this working assumption is too optimistic, which I do not trust, then we will look at the situation.”
Trichet also brushed off growing divergences within euro zone members’ economic performance, saying it was important to look at developments -- for example in current account balances -- for the region as a whole. (Reporting by John O’Donnell, additional reporting by John Acher in Copenhagen, writing by Sakari Suoninen and Krista Hughes; Editing by Ron Askew/Ruth Pitchford)
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