German Chancellor Angela Merkel said yesterday that “Germany wants to helpâ€, but Greece must meet a strict set of conditions before Germany will contribute to an aid package estimated to be worth up to €45 billion (US$60 billion). Germany’s cryptic messages continue to confound matters, and the resulting confusion over the status of the bail-out package, pushed the yield on 10-year Greek bonds to 9.4 percent. This is the highest return Greece has been forced to offer on 10-year bonds since the Eurozone became official in 1999.
Market watchers note that a key regional election is scheduled in Germany later in May. Some have suggested that Merkel’s continued reticence is a sop to German voters where monetary support for Greece remains a hard sell after Germany was forced to adopt its own “austerity†program during the height of the recession. To help make the expenditure of €8.3 billion (US$11.1 billion) – Germany’s estimated share of the rescue plan – more palatable, Germany’s Finance Minister, Wolfgang Schäuble, has been positioning the expenditure as a necessary evil to protect the value of the Euro itself.
Merkel described as “hard measures†the type of spending reform she insists is necessary for Germany to participate.
“When Greece accepts these tough measures, not for one year, but severalâ€, noted Merkel, “then we have a chance for a stable euro.â€
