The crisis in Greece's budget deficit has been a test of the economic stability of the European Union during difficult times, and the discussion over this week's upcoming EU summit in Brussels has centered on the crisis and brought to light clear division within the Union. During last week's summit, Greek prime minister George Papandreou seemed to explicitly request a possible rescue plan from European leaders, threatening to turn to the International Money Fund otherwise, which many would see as representing a failure of Europe's single currency. Papandreou told leaders in Brussels on Thursday "We are expecting this from the summit next week."
The message seemed clear enough, and European commission president Jose Manuel Barroso called for leaders to use the upcoming week's meeting to agree on a package of loans that could be put in place if Greece decided their current budget cuts (which have resulted in strikes and union protests) were failing to contain their ballooning debt. Barroso urged that simply having a set plan would itself reduce volatility in the market by providing clarity.
However, in a German radio interview, German Prime Minister Angela Merkel completely opposed both leaders, claiming that Greece was in no immediate economic danger and that aid for them would not be a topic at the summit. She instead argued that speculation over the possible bailout was the primary cause of recent market volatility.
"I don't see that Greece needs money at the moment and the Greek government has confirmed that. That's why I'd urge us not to stir up turbulence in the markets by raising false expectations for Thursday's council meeting,"
Merkel's statement is arguably about protecting the markets stability and interest in order to dissolve any uncertainty among citizens of the European Union, (and Germany specifically), and as such, her reasoning is somewhat valid. However, Papandreou's request for a specific plan for economic stability to calm the current governmental turbulence in Greece seem to point to an issue that cannot be simply swept under the table. Merkel seems to simply be ignoring a problem that is directly related to her own countries' economic strength and stability, and furthermore, the strength, (or otherwise dismemberment), of the EU as a whole.
Merkel's rationale may better be understood through fear's of a region-wide comic collapse as the euro has recently dropped to $1.35. Merkel has argued that a Greek bailout could set a dangerous precedent for the entirety of the EU, and during her radio interview, she again postulated the notion that countries who repeatedly broke, or hindered the EU's stability and growth pact did have the potential to be expelled from the organization. In the global economic downturn, it is difficult to maintain strong ties between nations, when the capital is simply inexistent. Although it is evident that Greek desperately needs help to maintain its nation, stronger socioeconomic and political ties need to be strengthened between countries currently existing in the European Union.
** Information obtained from the online journal of "The Guardian" a periodical published in the U.K.
www.theguardian.co.uk/business/2010