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BERLIN (MNI) – German Finance Minister Wolfgang Schaeuble in a
newspaper interview published Wednesday seemed to back down from his
opposition to financial aid by the IMF for the ailing Eurozone member
Greece.

“That a currency zone solves problems in part of its currency area
via the IMF can and must be only the exception,” Schaeuble told
Frankfurter Allgemeine Zeitung (FAZ).

He added that “in the long term” it was better if the European
Monetary Union solved its problems on its own.

Meanwhile, German ZDF public television reported on Wednesday that
the Eurogroup of Eurozone finance ministers were close to an agreement
over aid for Greece including a financial contribution by the IMF.

A high-ranking official from the German Finance Ministry said on
Tuesday that Germany and France had agreed on a participation of the IMF
in an eventual aid package for Greece. “We’re pulling together,” he
said.

The German daily Die Welt reported on Wednesday that Chancellor
Angela Merkel is willing to give up her opposition against financial aid
for Greece.

According to the paper, Merkel will agree to a declaration by the
Eurogroup, which will meet just before the EU Council of heads of states
and governments on Thursday.

The Eurogroup declaration will not include a special emergency plan
for Greece, Die Welt wrote. Rather, it will contain a general mechanism
for aid which can also be used in emergency cases like the current one
in Greece.

The IMF is to play a central role in granting financial aid to
Eurozone member states, Die Welt wrote. The IMF money is to be combined
with financial aid by the EU. Any financial aid would be tied to severe
conditions.

The paper cited high-ranking EU diplomats as saying that the
Eurozone states in their declaration will commit themselves to making
preventative measures and sanctions in the EU Stability and Growth Pact
more effective. If necessary, they will also be ready to change the EU
Treaties for that.

The paper also quoted the Finnish Finance Minister Jyrki Katainen
as saying that any financial aid for an Eurozone member state needed to
be bilateral “and a financing by the IMF should not be ruled out.”

Schaeuble told FAZ that bilateral aid would not violate the no-bail
out clause in the EU Treaties. “We have checked that carefully,” he
said.

The minister said he had pushed through at the last Eurogroup
meeting that there would be no issuance of a joint euro bond. However,
this does not mean that bilateral aid for Greece has already been
decided, he stressed.

“Greece has not asked for help,” he reminded. “Thus, the question
is not on the agenda currently.”

Yet, if a default of Greece is looming “one would have to act,”
Schaeuble acknowledged. “The credibility of the euro would be damaged.
Nobody can assess the consequences of such a case,” he warned.

The minister also repeated his demand that new regulations should
include the possibility of excluding states from the Eurozone as a last
resort.

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

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