German chancellor Angela Merkel met head on with the European Commission on the Greece question over the weekend. Chairman José Barroso is pushing European governments to commit to a Greek bailout this Thursday when member states convene in Brussels. Merkel is having none of it.
The chancellor declared on German radio on Sunday that no bailout is being considered. The Greeks themselves, after all, haven’t asked for help, she said. Barroso responded in today’s Handelsblatt, urging European states to find a solution, regardless of their internal politics.
Greece continues to struggle with record deficits and is forced to make drastic cuts in its expenditures. Little over a month ago, eurozone members pledged solidarity without reaching agreement on how exactly to come to Greece’s aid. Germany and the Netherlands have suggested that it seek support from the International Monetary Fund but France and Italy disagree, preferring that the European Union take care of its own. Italian prime minister Silvio Berlusconi even warned that if Europe fails to deliver, it has no right to exist at all.
There is further discord on the future of the Stability and Growth Pact. Berlin wants tougher sanctions for countries that violate Europe’s budget rules, including an ability to expel members from the currency union. The Commission doesn’t believe in threats. It would rather Brussels be more involved in countries’ budgeting from the start in order to prevent, not punish, excesses.