Merkel: 'Expel dealbreakers from euro'

Will Europe come to Greece’s aid? The Dutch parliament will debate the matter this Thursday night.

Merkel made her statement in the German parliament yesterday in a debate over the German state budget. According to the chancellor, current EU regulations are insufficient to tackle Greece’s current problems. Expulsion from the euro should be a possible “measure of last resort,” Merkel said.

Germany had already suggested the creation of a European Monetary Fund which could come to the rescue of countries that found themselves in budgetary problems.

The Greek prime minister Papandreou said there was “no chance at all” his country would be leaving the euro. On Thursday morning, Papandreou insisted on a substantial European aid plan for his country to appease financial markets. “We are not asking for money” Papandreou said. “What we are saying is we need strong political support in order to make these necessary reforms.” The prime minister said the existence of a plan would, in itself, put a stop to speculative investors exploiting his country’s plight. If European countries fail to reach an agreement over emergency aid to Greece, his country would be forced to call on the IMF for assistance, Papandreou said. This would lead to more speculation, which would raise the costs of Greece’s state debt even further, making it practically impossible to fight the budget deficit.

Next week, the government leaders of the 27 EU countries will decide whether or not to extend aid to Greece. Germany, the driving force behind the common currency, has made it abundantly clear in recent weeks it does not have a stockpile of cash ready and waiting for the Greeks. The Greek issue is a sensitive one in Germany. Opinion polls have shown that Germans oppose extending financial aid to any country running high budget deficits, be it Portugal, Greece or Ireland. The Netherlands is also not inclined to directly support these countries. The acting Dutch finance minister, Jan Kees de Jager, has said, “none of the Dutch tax payers’ money will go to Greece.” Earlier this week after meeting with European colleagues, however, he insinuated that he might be left with few other options if Greece was in danger of facing financial “doom”. This remark did not go over well with parliament, which has requested a debate with the minister, which will be held this Thursday evening.