Merkel: Germany has historical duty to help euro

July 22, 2011 - 7:58 AM
Germany Europe Financial Crisis

German chancellor Angela Merkel speaks during a press conference in Berlin Friday July 22, 2011. German Chancellor Angela Merkel said Friday it is Berlin's

BERLIN (AP) — German Chancellor Angela Merkel said Friday that it is Berlin's duty to support the euro currency as she praised the new eurozone agreement on a second bailout for Greece.

Merkel said the deal reached Thursday in Brussels to help Greece was a "significant" step that would help Europe and the currency used by the 17-nation eurozone.

"The euro is good for us, the euro is part of Germany's economic success, and a Europe without the euro is unthinkable," Merkel said. "It is our historical duty to support the euro."

She added that helping Greece out of its struggles is a Europe-wide responsibility.

"We know that the problem of one is also the problem of all," she said.

Even so, Merkel said Greece also has a responsibility to implement its package of austerity measures, structural reforms and privatizations "because this is the only way to address the underlying causes."

"You have to tackle the problem at the root," Merkel said. "This is about debt, but also about (a lack of) competitiveness."

The deal will still leave Greece with a mountain of debt that it will struggle to repay, and only begins to deal with the eurozone's chronic problems of too much debt in too many countries, shaky banks and uneven growth.

Greece will get euro109 billion ($156 billion) in new financing in a complex package that includes new loans, buybacks of Greek debt, and credit guarantees under the deal.

Merkel questioned accusations that the deal was not bold enough because the EU leaders stopped short of a forced debt restructuring, which would have reduced Greece's deficit more significantly but could have spooked financial markets.

"I'm speechless when I hear how careless people sometimes speak about a debt restructuring these days," Merkel said, adding that such a default could have been uncontrollable.

Merkel declined to say what the bailout may cost taxpayers, saying that it is not yet possible to determine.

"We are doing everything ... to keep the cost as low as possible," she said.

The leaders met under pressure from financial markets, which have driven up borrowing costs for larger economies such as Spain and Italy. The eurozone has already had to bail out Greece and indebted Portugal and Ireland when bond markets refused to loan them money at rates they could afford.

Merkel told reporters that there will be no "spectacular" and quick solution for Greece but that it will take "a process of different successive steps" to fix the country's problems.

But she said she's convinced Europe will emerge from the crisis stronger than before and that Greece will manage to turn its problems around.

"I think the country will manage it, and I'll do everything to support that," she said.

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Associated Press writers Juergen Baetz and David Rising contributed to this report.