German Chancellor Angela Merkel sought on Tuesday (September 13th) to quash speculation that Greece could soon declare bankruptcy, urging politicians to be more cautious in their public comments on the options facing the debt-laden Balkan nation.
“I think we will do Greece the biggest favour by not speculating much, but instead encouraging Greece to implement the commitments it has made,” she told Berlin-based public broadcaster RBB Inforadio.
Her comments came a day after German Vice-Chancellor and Economy Minister Philipp Roesler suggested in a press article on Monday that “an orderly bankruptcy of Greece” was one of the possible ways for stabilising the euro.
In an apparent rebuke to her deputy and other German politicians circulating that scenario, Merkel said what was urgently needed instead was concerted action to prevent the contagion from spreading to other Eurozone members.
“The top priority is to avoid an uncontrolled insolvency, because that would not just affect Greece,” she said. “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’s statement came ahead of a conference call between her, French President Nicolas Sarkozy and Greek Prime Minister George Papandreou, which is scheduled to take place on Wednesday.
Papandreou is expected to urge the leaders of the two biggest Eurozone economies to up the pressure on their banks to the take part in the private-sector involvement part of the planned second bailout for the Balkan country, Athens-based daily Kathimerini reported.
The discussion is expected to also focus on the Greek government’s privatisation programme and measures to cut public sector spending, a key requirement for the country to get the critically needed next 8-billion-euro tranche under its first bailout from the EU and the IMF.
The purpose of the reportedly hastily arranged conference call would be for Merkel and Sarkozy to assure Papandreou of their support for his efforts to reform the country’s economy. Ahead of an upcoming visit of EU, European Central Bank and IMF auditors to Athens, the two leaders are also expected to stress that Greece must show tangible progress in meeting the requirements for the next tranche under the 110-billion-euro rescue package agreed last year.
The Eurozone has been criticised for months for dragging its feet on measures to resolve its debt crisis, which has already claimed not only Greece, but Portugal and Ireland as well. There are growing fears now that Italy, the third biggest economy among the 17 EU nations using the common currency, whose debt stands at 120% of GDP, may become the next member of the euro club to fall. Investors are also worried about Spain, the Eurozone’s fourth largest economy.