Saturday, June 19, 2010

German-Spanish whispering wars hit euro zone

Reuters
June 18, 2010

A whispering war between German and Spanish officials has exacerbated the euro zone's debt crisis this month, keeping financial markets on edge and exposing deep frustrations in Berlin and Madrid.

European diplomats say the background to the leaks and counter-leaks lies in pressure from Germany -- Europe's economic powerhouse and main paymaster -- for Spain to take tougher austerity measures to cut its huge budget deficit.

The Germans seem to have fired the first shot, telling journalists in Berlin on condition of anonymity on June 7 -- the day the German coalition agreed on its own austerity package -- that Spain was on the brink of seeking a European Union bailout.

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