EU commission challenges German resistance over Greek bailout, still hopes for deal this week

EU commission faces German resistance on Greek aid

BRUSSELS — The European Union’s executive challenged Germany’s intransigence over financial help for Greece on Monday, asking that eurozone leaders agree on a package this week to finally put an end to its debt crisis and months of market turbulence.

German Chancellor Angela Merkel said Sunday that EU leaders should not discuss a bailout plan at a March 25-26 summit because Greece isn’t asking for one right now and should try to solve its debt problems itself.

Greece has tried — and failed — to win over markets worried that it could default on its huge debts. Its borrowing costs have not fallen despite a harsh program of cutbacks and a vague pledge of eurozone support.

The uncertainty has also driven down the euro which is now trading at around $1.36, nearly 10 percent lower than late November.

Greek Prime Minister George Papandreou says he wants political support from other members of Europe’s currency union to help drive down the high interest rates markets are charging Greece. If they can’t agree a bailout plan, he warns he will turn to the International Monetary Fund.

For EU officials, this would be a disaster for the 16 nations that use the euro — showing that their loose rules can’t prevent a member state getting into trouble or help it out when it risks being unable to repay debt.

EU spokeswoman Pia Ahrenkilde Hansen said EU Commission President Jose Manuel Barroso was “still hopeful” that eurozone leaders would heed his call for a decision on coordinated bilateral loans for Greece. Barroso said they wouldn’t need to be paid out instantly.

“We cannot prolong any further the current situation,” he said Friday. “I urge the EU’s leaders to agree on this instrument as soon as possible.”

EU spokesman Amadeu Altafaj Tardio said the EU executive was keen to eliminate uncertainty.

“This is not only about Greece, it’s about being in a position, if necessary, to ensure the financial stability of the whole euro area,” he told reporters.

Germany, however, sees no need for speed. Merkel told Deutschlandfunk radio on Sunday that EU leaders should not create “illusions” for markets.

“Help is not on the agenda on Thursday,” she said. “I would not recommend causing turbulence on the markets by raising false expectations for the summit. If Greece doesn’t need help, then we shouldn’t put this issue at the head of other discussions.”

Her spokesman Ulrich Wilhelm said Papandreou had telephoned Merkel on Sunday to repeat that Greece wasn’t asking for financial aid at this time. Wilhelm also reiterated that Berlin had no major objections to the country seeking IMF help.

French Foreign Minister Bernard Kouchner said France’s position was to support the currency union.

“We must support our Greek friends,” he said, without giving any details.

Associated Press writers Robert Wielaard in Brussels and Geir Moulson in Berlin contributed to this story.