Germany May Block More Greek Aid Without Reforms
08/12/2012| 09:06pm US/Eastern
Germany will block further financial aid for Greece unless the country meets the conditions of earlier aid packages in full, a senior member of German Chancellor Angela Merkel's CDU party warned in a preview of an interview to be published Monday.
Germany "will make use of its veto" over the euro zone's temporary rescue fund, the European Financial Stability Facility, if it thinks Greece hasn't fulfilled the conditions of its financial aid, Michael Fuchs, vice chairman of the parliamentary group of Germany's ruling CDU and CSU parties, told German newspaper Handelsblatt.
"Even if the glass is half-full, that isn't enough for a new financial aid package," Mr. Fuchs warned, adding that Germany "has reached the limits of its strength."
While a state can't be forced out of the euro zone, Mr. Fuchs said he expects that "the Greek government will know what to do if it isn't in a position to fulfill the reform conditions."
Mr. Fuchs also cautioned against the European Central Bank becoming a "covert printing press" for stressed euro-zone states.
If Greece doesn't stick to its reform promises, the ECB mustn't "open up opportunities to bypass and provide money that the Greeks otherwise wouldn't receive from the rescue funds EFSF or ESM [European Stability Mechanism]," he said.
ECB President Mario Draghi said earlier this month that the central bank may soon buy government bonds again on a scale that is "adequate" to help eliminate "exceptionally high risk premia" reflected in some bond prices, although he stressed that new purchases would be contingent on countries seeking support from the euro area's rescue funds and implementing belt-tightening measures.
The ECB is "treading a fine line" with its policy decisions and creating "new problems", Mr. Fuchs said.
He also ruled out providing a banking license for the ESM.
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