Merkel says help for Greece not on agenda at EU summit, comments follow request for loans

Merkel says aid for Greece not issue at EU summit

BERLIN — Rebuffing EU officials in Brussels, German Chancellor Angela Merkel said Sunday that Greece does not need any financial help and that EU leaders should not make aid an issue at their summit in Brussels this week.

The European Commission had urged Germany and other eurozone governments to put up a package of government-to-government loans to ease Greece’s financial plight and end weeks of financial turmoil and speculation.

The chancellor warned against discussions of possible EU bailout plans at the Thursday summit, saying it would only cause turbulence in the markets by raising false expectations.

“Aid is not on the agenda on Thursday,” Merkel told Deutschlandfunk radio, adding that Greek Prime Minister George Papandreou had assured her his country would not ask for EU support.

“I advise all of us to not cause turbulence on the markets by raising the wrong expectations for the summit on Thursday,” Merkel said.

She did not refer specifically to European Commission President Jose Manuel Barroso’s comments on Friday saying European aid was necessary because “we cannot prolong any further the current situation.”

He spoke of “coordinated bilateral loans” that would not have to be paid out immediately.

Even as a standby gesture, Barroso said, the availability of aid from Greece’s partners would show financial markets that EU nations are united to defend their single currency and the stability of the eurozone, the area of 16 EU nations that share the euro as their currency.

On Sunday evening, daily Handelsblatt quoted Barroso as saying that “it is in the German interest to secure the stability of the eurozone. I am sure that Germany will make a constructive contribution to solve the current crisis.”

Italian Premier Silvio Berlusconi told a news conference in Bologna that “if in the EU there’s no willingness to help a country in crisis and which is in the euro (zone), then the EU would have no reason to exist,” the Apcom news agency reported. It said he was replying to a question about Germany’s negative opinion.

EU sources have estimated that Greece needs a financial injection of about euro20 billion ($27.1 billion).

Barroso’s proposal on Friday came as Germany and the EU head office were at loggerheads after German officials said Berlin can’t rule out financial aid for Greece from the International Monetary Fund.

EU officials prefer to resolve the Greek financial crisis through European aid. But Barroso said he “did not want to speculate if there will be a financial contribution from the IMF.”

Germany — Europe’s biggest economy — has been reluctant to pledge direct financial aid because German public opinion takes a dim view of the shoddy statistics-keeping that has long hidden the true size of Greek deficits and debts.

On Thursday, Greece warned it would be forced to turn to the IMF for help — which would be an embarrassment for the single currency bloc — if the EU fails to extend any concrete support package to help reduce its market borrowing rates.

Greece’s mounting debts hit confidence in the euro and jolted world markets. Athens has pledged to slash its budget deficit from an estimated 12.7 percent of gross domestic product in 2009 to 8.7 percent this year, and bring it under the EU limit of 3 percent in 2012.

A European or IMF backstop would be aimed at reassuring markets and bringing down the high rates demanded from Greece as it seeks to borrow some euro54 billion this year to plug its budget gap.

Associated Press Writer Frances D’Emilio in Rome contributed to this report.