Merkel Warns Against Abandoning Greece
German Chancellor Angela Merkel has spoken out against allowing Greece to fall out of the Euro Zone by blocking the second bailout that she proposed last week, stating that such a move would cause “incalculable” damage.
According to Bloomberg, she does not really need to be worried. Her Christian Democratic-led bloc and its Free Democratic Party coalition partner look certain to win the vote on Monday to guarantee the $175 billion bailout package. Questions remain, sure. A bailout of this magnitude absolutely should raise many questions. This is, after all, tax payer's money that is being sent to Greece and it would be irresponsible to do so without desperately looking into every option. But, as Merkel has said throughout, the failure of the 17-member euro to push this through could endanger the European Union and even the global economy in general.
If that all sounds a little apocalyptical, that is because it is, but Merkel knows exactly what she is talking about.
“I think those risks are incalculable, and therefore indefensible,” Merkel told lawmakers in the lower house of parliament. “I should and have to take risks, but I cannot embark on adventures. My oath forbids that.”
Again, the Chancellor has an advantage, as her coalition has a 20-seat majority in the 620-seat Bundestag. In addition, the bill is being backed by opposition Social Democratic and Greens lawmakers. Combined, those parties hold 222 seats.
In response to the news / upheaval, the Stoxx Europe 600 Index (SXXP) fell 1.1% to 262 at 2:30 p.m. British time (9:30 a.m. EST), which extends last week's 0.4% retreat. The euro nowlooks 0.3% weaker at $1.3405.
“There's no need now for a debate on increasing the capacity” of the temporary and permanent bailout funds, Merkel said, before adding that euro leaders will this week set about discussing moving up capital payments for the permanent fund and the European Stability Mechanism. Merkel also said that Germany is willing to pay 11 billion euros this year alone, if other euro nations will also agree to speed up payments.
While the bill looks certain to pass with the approval of the majority of politicians, however, the majority of German citizens are against it. A pool over the weekend revealed that 62% of Germans would rather the package be voted down, with only 33% approving.
“The path that Greece has to take is a long one, and certainly one not without risks,” Merkel said. “This is also for the success of the new program. Nobody can give a 100 percent guarantee of success.”
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