Merkel says EU could back Greece as 'last resort'

Speaking in Parliament on 24 March, European Commission President José Manuel Barroso said the Commission believes that it is now appropriate to create, within the euro area, an instrument for coordinated action which could be used to provide assistance for Greece if necessary.

"It should be clear that the creation of such a mechanism would not imply its automatic activation. Creating such a mechanism is also a question of responsibility and solidarity. Solidarity is a two-way street. Greece is making an economic effort at this point and by supporting these efforts we do not only help Greece but the stability of the euro zone as a whole.”

"The framework for coordinated action should be understood as a safety net to be used only in case that all other means to avoid a crisis have been exhausted, including first and foremost exhausting the scope for policy action at the domestic level."

"Beyond technical aspects, any possible solution must reinforce and strengthen the unity and the coherence of the euro zone and its governance. The world economy needs stability. The euro zone is a pole of stability, and it is important that its capacity to provide stability is further enhanced. We may need to resort to inter-governmental instruments for some issues, but they need to be embedded into a joint European framework," Barroso stated.

The European Central Bank will extend its easier rules on accepting assets as security in liquidity operations into 2011 as well as introduce a new sliding scale of risk margins, ECB President Jean-Claude Trichet said on 25 March, Reuters reported.

Trichet said the extension would be coupled with new risk margins, or haircuts, on assets.

"It is the intention of the ECB Governing Council to keep the minimum threshold in the collateral framework at investment grade level, BBB- , beyond the end of 2010," Trichet told the European Parliament.

"In parallel we will introduce, as of January 2011, a graded haircut schedule, which will continue to adequately protect the Eurosystem," he said.

Guy Verhofstadt, leader of the Alliance of Liberals and Democrats in Europe, told journalists on 24 March that at their summit, EU leaders should "put an end to this discussion" on how to address the Greek economic crisis, a discussion which he said was "destroying everything".

"It has been months since we had discussions and different solutions have been put forward," he said, speaking in French, adding that "their result has been bad for Europe, bad for the euro".

"I think some people should stop saying that sentence, which has been spreading through Europe, that 'No aid for Greece'. This is indeed a huge threat, because it created an anti-European state of mind amid many Europeans, in several member states, within a just a few days. We never had such a devastating effect on feelings of people toward Europe than we have now".

"Moreover, it's not about money, because Greece needs no money," he continued. "Greece needs an instrument, which would allow it, in parallel with the austerity measures they are putting in place, to pay less interest rates on state liabilities. It's not about us giving money, nobody will open their coffers, take euros from there and give them to Greece. It's not about that."

"We are witnessing a pollution of the climate that prevailed in Europe since the entry into force of the Lisbon Treaty, by making people believe that Greece is asking for money […] A European solution for Greece costs no money. If the Commission, the ECB or the EIB [European Investment Bank] issues a loan to Greece, Greece will pay the interest rates, therefore this will cost the European citizen not a cent. But the interest rate - if the loan is granted by a European institution - will be lower, for the simple reason that European institutions have more credibility and that they have more liquidity," Verhofstadt argued.

Asked by EurActiv why he was stopping short of naming German Chancellor Merkel and of spelling out the word 'populism' as Germany is faced with public opposition to a bailout and regional elections due shortly, Verhofstadt said:

"Would it help if I give a definition? This is of interest for commentators, for sociologists and for political scientists. I'm trying to make things change, together with the [European] Parliament […] We have to decide. Even the worst system we would be able to put in place is better than to continue in the incapacity to decide."

Socialists & Democrats group leader Martin Schulz said in Parliament on 24 March that EU leaders, and especially German Chancellor Angela Merkel, should show solidarity with Greece.

By presenting its austerity plan, Greece has done its part of the work, said Schulz, speaking in French.

"Those who didn't do their job are the members of the euro zone and in the first place the German Chancellor, who doesn't keep her promises," he declared.

"It is not about taking the money of French, Italian or German taxpayers for refilling Greece's coffers, but to help the country borrow on the international markets at interest rates similar to those for the other countries," he continued.

"In the absence of European solidarity, the money goes into the pockets of speculators," he added.

"If we don't want the fire to be extended to other countries as well, we need to show solidarity with Greece," Schulz said.

Lena Ek (Centre Party, Sweden), ALDE spokesperson on the 2020 economic recovery strategy, expressed her disappointment with the draft Council conclusions, which she said appear to repeat the mistakes of the past.

"Europe is afflicted by a perfect storm of financial, economic and environmental crises which call for strong and united leadership this week," she stated.

German MEP from the Confederal Group of the European United Left - Nordic Green Left GUE?NGL Jürgen Klute said the current problems were a function of EU finance and competition policy and a failed Stability and Growth Pact.

"Chancellor Merkel is poised to make Germany the European champion at selfish idiocy. Why is Greece not entitled to the same assistance received by reckless bankers?" he said, reiterating a call for a ban on credit default swaps.

Greek GUE/NGL MEP Charalampos Angourakis spoke of the decline in Greek living and working conditions saying that "people are suffering as belt-tightening policies drive wages down. Capitalists are profiting from this squeeze on labour and workers are being forced to pay for their crisis."

"Mr Trichet, you seem to think the crisis is not yet over" said MEP Nikolaos Chountis (GUE/NGL), also from Greece "but there are varying shades of Greece within the EU with many countries facing similar problems" he said, criticising the implementation of the stability and growth pact in times of recession as a "disastrous policy".

French MEP (GUE/NGL) Marie-Christine Vergiat called for action to be taken against speculators and attacked the notion that "it should always be the same people who have to pay up when their country is a victim of such financial speculation".