BERLIN (MNI) – The current sovereign debt crisis is not an
existential threat to the Eurozone, German Chancellor Angel Merkel said
in a television interview aired late Tuesday night.

“I don’t think that the Eurozone is endangered,” Merkel told German
ARD public television. “Yet, we have turbulences and situations, which I
myself would never have thought of one and a half year ago,” she
acknowledged.

Next to possible rescue measures, what is most important is that
Eurozone member states coordinate their economies better, the Chancellor
insisted.

Weaker countries need to prop up their competitiveness, she said.
Pointing to the efforts already underway in Greece, Spain and Portugal,
Merkel reckoned “we will be able to achieve that and the euro is an
important and strong currency.”

Commenting on Ireland’s debt problems, Merkel noted that there
exists an EU rescue fund if a country needs help. However, at the
moment, she doesn’t see that need, the Chancellor said.

EU officials said on Tuesday night on the sidelines of the
Eurogroup meeting in Brussels that talks on a possible loan deal for
Ireland are intensifying and a technical mission of officials from the
European Central Bank, the European Union and the International Monetary
Fund will travel to Dublin to prepare a possible program.

The officials stressed that debt-ridden Ireland hasn’t asked for
aid yet and the talks, which they expect to be “short” and “focused,”
are only preparatory at this stage.

“We have decided with the Irish government to intensify talks with
the EU troika,” Olli Rehn, the European Commissioner for Economic and
Monetary Affairs, told reporters at a press conference after the
Eurogroup meeting.

He said the plan would focus on the banking sector and be ready in
case the Irish government does decide to ask formally for help.

Luxembourg Prime Minister and Eurogroup President Jean-Claude
Juncker said the Eurozone has the means and the will to financially
assist Ireland, if the country wants help.

Ireland is planning E15 billion of cuts over the next 4 years to
brings its deficit back below the EU’s 3% limit, but the market doesn’t
believe it will be able to cut its debt burden without external help.

Slower-than-expected growth and the cost of bailing out the its
banking system will push Ireland’s budget deficit to 32% of its GDP this
year. The Irish government has committed to getting the deficit below
the EU’s 3% limit by 2014. Stripping out the banks, the deficit will be
around 11.9% this year, still one of the largest in the Eurozone.

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

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