Wed, Sep 14, 2011 page10

• Merkel seeks to calm market’s fears

  JITTERS: The latest turmoil came after German policymakers suggested an orderly exit from the EU was possible for Greece, while the IMF released US$5.4 billion to Portugal

  • AFP, BERLIN and Washington
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  German Chancellor Angela Merkel yesterday sought to ease fears over a possible Greek bankruptcy, saying the 17-country eurozone had to stick together and that an “uncontrolled insolvency” must be avoided.

  “The top priority is to avoid an uncontrolled insolvency, because that would not just affect Greece, and the danger that it hits everyone — or at least several countries — is very big,” Merkel told German radio station RBB.

  She stressed that the eurozone had to remain intact, hinting that if Greece were to leave the group, others would swiftly follow.

  

  German Chancellor Angela Merkel speaks on the second day of the International Meeting of Prayer for Peace in Munich, Germany, on Monday.

  Photo: Reuters

  “I have made my position very clear that everything must be done to keep the eurozone together politically. Because we would soon have a domino effect,” the chancellor said.

  Merkel also had encouraging words for debt-wracked Greece, which is trying to persuade an international team, known as the “troika,” that it is getting its public finances back on track, a prerequisite for more aid.

  “Everything I hear from Greece is that the Greek government has hopefully seen the writing on the wall and is now doing some of the things that are required,” she said.

  And in a bid to calm markets, which went into free fall on Monday after comments from German policymakers that an orderly insolvency for Greece or even a eurozone exit was possible, she urged politicians to choose their words cautiously.

  “Everyone should weigh their words very carefully. What we do not need is volatility on the financial markets. The uncertainties are already big enough,” Merkel said.

  The latest bout of jitters in the markets were partly stoked by comments from German Vice Chancellor Philipp Roesler that there should be “no bans on thinking” in how to resolve the euro crisis, including an “orderly insolvency.”

  Greek Finance Minister Evangelos Venizelos was to speak yesterday with German Finance Minister Wolfgang Schaeuble and later meet the head of a European Commission task force for the debt-ridden country as the government struggles to contain a crippling financial crisis that is roiling global markets.

  Meanwhile, the IMF said on -Monday it was immediately -releasing about 3.98 billion euros (US$5.4 billion) to Portugal, part of a three-year rescue of the eurozone country.

  The IMF executive board on Monday completed a review of Portugal’s performance under an economic program supported by the 27.27 billion euro emergency loan approved in May, the lender said in a statement.

  The IMF loan is part of a rescue package with the EU amounting to 78 billion euros over three years.

  Lisbon has been forced to adopt tough austerity measures in an effort to stabilize the public finances, dampening domestic consumption in the process.

  Portugal, the third eurozone country after Greece and Ireland to have received an IMF-EU bailout package, no longer raises long-term debt on the markets because borrowing prices are too high.

  Portuguese Finance Minister Vitor Gaspar said on Tuesday last week that Portugal would return to the markets by 2013 once the country had passed this “financial emergency.”

  On Aug. 12, the IMF, the EU and the European Central Bank gave the green light for an 11.5 billion euro second tranche of aid as part of Portugal’s debt bailout plan, citing progress in the country’s austerity measures.
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