Loose Talk on Greek Default Could 'Cost Billions'

Spiegel
September 13, 2011

Members of Angela Merkel's government have been openly discussing the possibility of a Greek bankruptcy, a debate the chancellor sought to quash on Tuesday. The statements made by her junior coalition partners have unsettled markets and could "cost billions," German commentators warn.

Against the background of increased pressure from the United States for a more resolute approach to the euro debt crisis, German Chancellor Angela Merkel on Tuesday moved to crush speculation within her government about a possible Greek default.

The future of Europe is tied to the common currency, Merkel told the Berlin public radio station RBB. "For that reason everyone needs to weigh their words very carefully," she said. "What we don't need is disquiet on the financial markets. The uncertainties are already great enough."

Her comments were viewed as an indirect jab at Vice Chancellor and Economy Minister Philipp Rösler, who distanced himself from the government over the weekend with a newspaper commentary. In the piece for the conservative daily Die Welt, the leader of her junior coalition party, the increasingly unpopular pro-business Free Democrats (FDP), said "there can no longer be any taboos" in the debate over the euro crisis, including, if necessary, "an orderly bankruptcy of Greece, if the required instruments are available."

Merkels comments also appeared to be aimed at Bavarian Governor Horst Seehofer, who is the leader of the Christian Social Union (CSU), the sister party to the chancellor's conservative Christian Democratic Union (CDU). Seehofer has raised the possibility of a Greek exit from the euro zone in recent days.

Merkel's attempt to silence grumbling over Greece within her coalition came ahead of a Tuesday meeting with Finnish Prime Minister Jyrki Katainen. Helsinki has demanded extra guarantees from Greece in exchange for its approval of a second bailout package, but Berlin rejects special rules that would create an additional burden for other euro-zone nations.

More