ECONOMY

Brussels sends out stern message

As Greece’s fiscal woes continued to weigh on the euro yesterday, the Greek government received a stern message over its bloated debt, while Germany and other eurozone countries said it was above all up to Athens to sort the problem out. With financial markets fretting over Greece’s ability to service one of Europe’s biggest sovereign debts, the message came from German Finance Minister Wolfgang Schaeuble and others at a Eurogroup meeting of eurozone finance ministers in Brussels. «We have a new government in Greece. It must cope with a difficult task,» he told reporters. «In tackling it, they are entitled to support but that doesn’t mean that we can spare Greece taking the necessary steps.» Dutch Finance Minister Wouter Bos put it even more bluntly in remarks to journalists. «We should encourage countries to show they are aware of their own responsibility to get their finances in order. This [responsibility] is primarily for the country itself,» he said. «I think the Greeks are aware of the seriousness of the situation. I can understand why the markets are not convinced yet.» Asked whether other countries would help Greece, Bos added, «The core of what needs to be done needs to be done by the Greeks themselves.» At the Brussels meeting, the ministers are expected to be updated on Greece’s deficit by Finance Minister Giorgos Papaconstantinou as well as to hear the results of an information-gathering mission to Athens last week by officials from the European Central Bank and European Commission. Markets are awaiting the European Commission’s view of the long-term deficit targets Athens has announced. A Commission spokeswoman indicated last week that such an announcement would not be immediate. The ministers were also due to discuss the reliability of Greek statistics after a European Commission report showed Greece had for years misreported budget deficit data because the statistics-gathering system was open to political influence. The remarks by Germany’s Schaeuble and Dutch Minister Bos revealed what some officials are saying off-record is great irritation with Athens. Meanwhile, the euro traded near a one-week low against the dollar amid speculation that a meeting of European officials won’t provide solutions to Greece’s deteriorating public finances. Europe’s currency also slumped to the weakest level against the yen since December as finance ministers from the 16 nations that use the euro met in Brussels to scrutinize Greece’s fiscal plans. Debt larger than that of Russia, Argentina Possible bankruptcy by Greece would be on a larger scale than that of Russia and Argentina combined, warned Deutsche Bank in a report. The bank pointed out that Greek debt is more than double the estimated outstanding debt levels of Russia in 1998 (51 billion euros) and Argentina in 2001 (57.2 billion euros) when both countries were in financial strife. Deutsche Bank, which is believed to have significant exposure to Greek government bonds, said that if conditions get worse then Europe is in danger of entering a cycle where problems move from one state to another in a similiar development to that seen in the credit industry. High debt levels in Portugal and Spain also make these countries vulnerable, it added. Meanwhile, The Times newspaper reported that Greece’s fiscal crisis could easily become Germany’s crisis. The British paper said that German Chancellor Angela Merkel will have to decide whether she will guarantee Greek debt or allow a crisis to spread through the 16-nation eurozone.