BERLIN (MNI) – The German government on Monday reaffirmed its
determination to make creditors participate in future bailouts of
Eurozone member states when the current EU rescue funds expire in June
2013.

If a new permanent EU crisis mechanism doesn’t include the
financial participation of creditors then it will always be the taxpayer
who has to carry the full burden of future debt crises, German
government spokesman Steffen Seibert said at a regular press conference
here.

“This is something that the [German] federal government cannot and
will not accept,” Seibert stressed.

Eurogroup president Jean-Claude Juncker, however, reaffirmed in a
radio interview aired earlier on Monday that he does not support the
German proposal. “In that case we would be contributing to investors
shying away from the periphery of the Eurozone,” he told German
Deutschlandradio Kultur.

ECB Executive Board member Lorenzo Bini Smaghi, in a newspaper
interview published Sunday, also warned that the German plans risk
driving away investors in droves. “This would be a recipe for sheer
catastrophe,” he said.

Commenting on Ireland’s request for financial aid, Seibert
announced that Germany “will insist on a strict reform program” for the
country.

There will be no extra vote needed by the German parliament for the
aid to Ireland, the spokesman stressed, reminding that the EU rescue
fund was already adopted by parliament in spring.

The German government is confident that these rescue funds are in
accord with the German Constitution, Seibert said. The government
expects that the German Constitutional Court will rule on the matter
“relatively soon,” he said.

The German budget will not be directly affected by an eventual
contribution to Ireland, finance ministry spokesman Martin Kreienbaum
said at the same press conference.

He reminded that the European Financial Stability Facility can
raise any aid for Ireland by borrowing in financial markets, and Germany
and other Eurozone states would then guarantee those loans.

Kreienbaum said the government did not fear that Irish aid could
hurt Germany’s creditworthiness.

–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com

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