Finance

Finance

Euro faces serious loss

01 March 2010 10:43 (UTC +04:00)

Baku - APA-Economics. German Chancellor Angela Merkel said she aims to calm the turmoil over Greeceâ€™s budget crisis in talks with Prime Minister George Papandreou, signaling her concern that â€œemotionsâ€ may be spinning out of control, Bloomberg reports.

Greeceâ€™s budget deficit, the European Unionâ€™s biggest, has triggered the euroâ€™s longest losing streak against the dollar since November 2008 and forced EU leaders to plan for possible emergency aid. The crisis has spilled over to German-Greek relations, after Greek Deputy Prime Minister Theodoros Pangalos suggested Germany isnâ€™t entitled to criticize Greece because of the Nazi-era occupation of his country during World War II.

Merkel, who is scheduled to host Papandreou for talks on March 5, wants â€œto stay in close contact with him so the emotions donâ€™t run so high,â€ she said in off-the-cuff studio remarks in Berlin yesterday overheard by reporters. On camera, Merkel said in an interview on ARD television that â€œthe euro is certainly facing the most difficult phase since its inception.â€

The comments are further evidence of Merkelâ€™s concern about the risk Greece poses to the single currency, to Germany and the EU as a whole. Merkel, who leads Europeâ€™s biggest economy, warned as early as Jan. 13 that Greece â€œcan put us under great, great pressures.â€

German lawmakers say euro-area officials are crafting a plan to grant Greece about 25 billion euros ($34 billion) in aid should the need arise, possibly by using state-owned lenders such as Germanyâ€™s KfW Group to buy its debt.

Merkel said in the interview that decisions on aid â€œabsolutely havenâ€™t been takenâ€ and the European Commission, the EUâ€™s executive arm, is in charge of the blocâ€™s response.