In a message being viewed as the German Chancellor’s effort to reach the general public, Angela Markel said on Saturday that helping the fledgling European countries was important for Germany’s own economic health.
The Chancellor’s observation comes a day after the German parliament approved extra emergency loans to Greece through the passage of a non-binding resolution. However, the loan will be given on the condition that present bondholders’ also share a part of the bail-out burden.
“If we don’t take action in a positive way, that could happen, but it is exactly what we want to prevent”, said Ms Markel when asked if the eurozone debt crisis could impact Germany’s economic recovery.
“Therefore we should not simply allow the uncontrolled bankruptcy of a state. Instead we must see how we can increase the competitiveness of countries in difficulty and give them the chance to work off the debt”, she added.
The EU leaders are slated to meet in Brussels for a summit meet on June 23-24 to discuss a new rescue package for Greece. The €120 billion package will ensure that the country remains funded through 2014, officials with direct knowledge of the developments said.
The collapse of investment bank Lehman Brothers had triggered the world-wide recession in 2009, said Ms Markel warning: “We should not do anything that would endanger the global recovery and put Germany back in danger”.
The current slowdown is the worst witnessed by Germany since the World War II. “Such an event had not happened for decades and absolutely must be prevented”, added Ms Markel.
Wolfgang Schäuble – the German Finance Minister urged the parliament to approve additional aid for Greece on Friday and said private participation in the new package was ‘unavoidable’. To ensure Greek liabilities are extended, he favoured a bond swap that would push bond maturities back by seven years.