German minister: Parliament won’t address Greek aid until Athens completes EU, IMF talks

Germany: aid to Athens only after austerity talks

BERLIN — Chancellor Angela Merkel said Monday that Germany is committed to helping Greece, but insisted Athens must first prove it is willing to push through tough, viable austerity measures.

Germany agreed, after much foot-dragging, to take a part in assisting Greece for the sake of the euro’s stability, but is also insisting Athens first wrap up talks wit the European Union and International Monetary Fund on a plan for austerity measures for the coming years.

“It is important that Greece now makes clear in a believable way that it is willing to go down a path of sustainable development to gain back its financial and economic power,” Merkel said.

“We need a positive development in Greece, connected with further austerity measures. If that can be negotiated, and when it is clear that there are no other alternatives … then Germany will of course take the necessary parliamentary steps.”

After meeting with the leaders of Germany’s parliamentary parties, Wolfgang Schaeuble told reporters that Berlin had hoped the offer of bailout measures alone would be enough to calm the crisis in Greece, but underlined that Germany remained committed to its offer of aid.

“Our national responsibility is connected to Europe and will be guaranteed,” Schaeuble said.

On Friday, Greece asked for a financial rescue package worth some $50 billion, drawn up by the 16-member nations that use the euro as well as the International Monetary Fund. Germany would be the biggest single contributor, providing some euro8.37 billion ($11.2 billion) in loans.

The measure needs parliamentary approval, but German lawmakers have been hesitant to embrace the deal because the country’s most populous state, North Rhine-Westphalia, will elect a new state parliament on May 9. The government was hoping to delay the decision for the highly unpopular financial aid package until afterward.

With the future of the rescue package still uncertain, Greece’s borrowing costs have been soaring.

The gap between Greek and benchmark German 10-year bond yields reached a record 6.21 percent Monday, which translates to a borrowing cost of more than nine percent.

This means that were the government to try to raise money on the markets, it would have to offer interest approaching 10 percent — three times what economic powerhouse Germany pays.

Schaeuble urged Athens to wrap up austerity negotiations by the end of the week, so that parliament can take up the approval. He warned that if the aid had not been approved by May 19, when Greece is to ask for its next round of loans, it could drive borrowing costs even higher.

Schaeuble also warned Germans to be “more friendly” to their European partners.

“It is not about judging the individual behavior of people in individual European countries,” Schaeuble said. “It’s about the question of one currency. This common European currency … must remain stable.”

In Italy, Foreign Minister Franco Frattini urged Germany to move ahead with approving the loan guarantees.

“I’m worried about a certain inflexibility that Germany has shown, but on the other hand it’s necessary for Greece to take a credible step,” Italian Foreign Minister Franco Frattini said, according to the ANSA news agency.

“From our point of view, we mustn’t have doubts,” Frattini said. “If the common house is in difficulty, we must save the walls because we are all in this common house together,” he said in Luxembourg.

“What’s needed is for both parties to take a step forward,” Frattini added, according to ANSA. Frattini said that “if a domino effect is set off, it is impossible to know where it will end.”

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Associated Press Writers Juergen Baetz in Berlin, Alessandra Rizzo in Rome and Elena Becatoros in Athens contributed to this report.