Merkel says Greece must fix fiscal problems (Roundup)

Feb 28, 2010, 16:28 GMT

Berlin - German Chancellor Angela Merkel called Sunday for Greece to fix its fiscal problems and admitted that the common euro currency was facing its worst test ever from the Greek crisis.

In a television interview to be aired later Sunday, she rejected any bail-out and said, 'The best way we can help Greece right is to make clear: they have to do their homework.' ARD public television released a partial transcript to other media.

Greek Prime Minister Giorgos Papandreou is due in Berlin this Friday to meet with Merkel. She spoke after days of friction, played out between the Greek and German media, over whose responsibility it is to act.

'The euro is definitely in the most difficult phase since its creation,' Merkel said. She said Greece had to carry out the austerity moves it had said it planned to solve the crisis.

'Greece has got to do what is important for the country, but is also important for us all,' she said.

It was going to have to persuade the European Commission, the European Central Bank and the International Monetary Fund (IMF) that its austerity programme would solve the problems.

Earlier, Greek government spokesman Giorgos Petalotis, on a visit to Germany, appealed for 'political and moral support' from Berlin to beat the fiscal crisis in Athens. He spoke in the city of Nuremberg, where he was visiting the local Greek community.

The spokesman said Greece needed Germany's help to ward off the 'disastrous effects of speculation.'

He said Greek government bond issues were now weighed down by a risk margin two to three times as high as that Germany usually paid, adding to Athens' difficulties. 'Greece going bankrupt would be a terrible blow to the eurozone,' he warned.

The spokesman insisted Greece was not seeking financial aid or a debt write-off from other European Union nations in order to overcome its budget woes.

'Greece will be paying back its debts,' Petalotis said. 'Nobody is expecting a single EU taxpayer to chip in for Greece's debts.'

The German and Greek media have traded abuse in the past few days. The German media have depicted Greece as spendthrift. One German magazine, Focus, outraged Greeks with a front cover that depicted a nude Greek classical sculpture offering an obscene hand gesture.

Greeks, including their outspoken deputy prime minister, Theodoros Pangalos, responded with claims that Germany had not made adequate reparations for war crimes and damage by the Nazis 65 years ago.

Petalotis said anti-German sentiment whipped up by certain politicians did not reflect the true attitudes of ordinary Greeks.