German minister: Parliament won’t address Greek aid until Athens completes EU, IMF talks

Germany: aid to Athens only after austerity talks

BERLIN — Germany is committed to assisting Greece for the sake of the euro’s stability, but won’t take up the country’s aid request until it wraps up talks with the EU and IMF on austerity measures, the finance minister said Monday.

After meeting with the leaders of Germany’s parliamentary parties, Wolfgang Schaeuble told reporters that Berlin had hoped the offer of bailout measures alone would be enough to calm the crisis in Greece, but underlined that Germany remained committed to its offer of aid.

“Our national responsibility is connected to Europe and will be guaranteed,” Schaeuble said.

On Friday, Greece asked for a financial rescue package worth some $50 billion, drawn up by the 16-member nations that use the euro as well as the International Monetary Fund. Germany would be the biggest single contributor, providing some €8.37 billion ($11.2 billion) in loans.

The measure needs parliamentary approval, but German lawmakers have been hesitant to embrace the deal because the country’s most populous state, North Rhine-Westphalia, will elect a new state parliament on May 9. The government was hoping to delay the decision for the highly unpopular financial aid package until afterward.

With the future of the rescue package still uncertain, Greece’s borrowing costs have been soaring.

The gap between Greek and benchmark German 10-year bond yields reached a record 6.21 percent Monday, which translates to a borrowing cost of more than nine percent.

This means that were the government to try to raise money on the markets, it would have to offer interest approaching 10 percent — three times what economic powerhouse Germany pays.

Schaeuble urged Athens to wrap up austerity negotiations by the end of the week, so that parliament can take up the approval, warning that if the aid had not been approved by May 19, when Greece is to ask for its next round of loans, it could drive borrowing costs even higher.

Schaeuble also warned Germans to be “more friendly” to their European partners.

“It is not about judging the individual behavior of people in individual European countries,” Schaeuble said. “It’s about the question of one currency. This common European currency … must remain stable.”

In Italy, Foreign Minister Franco Frattini urged Germany to move ahead with approving the loan guarantees.

“I’m worried about a certain inflexibility that Germany has shown, but on the other hand it’s necessary for Greece to take a credible step,” Italian Foreign Minister Franco Frattini said, according to the ANSA news agency.

“From our point of view, we mustn’t have doubts,” Frattini said. “If the common house is in difficulty, we must save the walls because we are all in this common house together,” he said in Luxembourg.

“What’s needed is for both parties to take a step forward,” Frattini added, according to ANSA. Frattini said that “if a domino effect is set off, it is impossible to know where it will end.”

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Associated Press Writers Juergen Baetz in Berlin, Alessandra Rizzo in Rome and Elena Becatoros in Athens contributed to this report.