Rally Killer? German Report Says "EMU States Can't Guarantee Other States' Debt"
Confusion reigns day 2, only this time add a pinch of political dissent. Germany's ruling coalition of the Free Democratic Party and the Christian Democratic Union has commissioned a parliamentary report which concludes that "member states may not guarantee the debts of another member state" reports daily Handelsblatt.
Market News reports:
Germany's government is not allowed to help Greece, as such aid would violate European Union law, German business daily Handelsblatt reported Wednesday, citing an internal report from the German parliament.
The legal report also rules out any form of financing of the Greek budget through the ECB or national central banks.
"Moreover, member states may not guarantee the debts of another member state," the report argued.
From Dow Jones:
A German parliamentary report has concluded that many forms of potential aid to the Greek government would violate European Union regulations, the Handelsblatt newspaper reported on its Web site Wednesday.
The parliamentary report states that aid from the European Central Bank, the national banks of euro-zone members, as well as euro-zone governments, would violate EU rules, the Handelsblatt said, citing documents reviewed by its reporters.
"The member states also may not answer or stand in for the central government of a member state," the report says, according to the newspaper.
Members of the Free Democrats, the pro-business party that shares Chancellor Angela Merkel's center-right government, have reportedly urged the government to take the report seriously.
Euro-zone finance ministers are scheduled to discuss Greece's mounting budget woes in a conference call Wednesday afternoon.
And here is the Google translated section from Handelsblatt directly:
FRANKFURT / BERLIN. "For the bilateral aid, the same as for EU aid: they are not on the agenda," it said on Wednesday in German government circles. There are no plans for support of this kind. "The acquisition of debt by other countries (from the EU) is inadmissible, that says it all," said government representatives. The EU's current ban on a joint rescue operation for a country also applies to the national level. "Basically, the bail-out ban is not only for Community instruments, but also for bilateral," it said in the circles. "There's no doubt about the solvency of Greece. There is also no financing needs now, "it said.
report of a research department of the Bundestag, held by the
Handelsblatt, Moreover, it is having regard to current EU law, that the
Bundesregierug Greece may reach under her arms. The Parliament's legal experts warn that Berlin before a rescue package. They exclude, in its opinion not only any form of financing by the Greek budget by the ECB and national central banks. "Also, a Member State shall
not be liable for the debts of the central government of another State,
or advocate," write the lawyers. Explicitly states that: That's Germany was also bound
The legal view is shared by the chief economist of the Allianz Group, Michael Heise. He
recently showed in an interview with Handelsblatt online to possible
legal problems in Greece-Aid, since the Maastricht Treaty a "bailout",
an assumption of debts of individual countries by the community,
generally excludes. Heise has therefore advised to provide EU aid
to state indebtedness "only in exceptional cases," but does not advance
in prospect, especially since the current financial distress of some
euro area countries not due "primarily to the financial crisis, but a
consequence of long-term budget deficits and partly creative accounting
is ". Was therefore primarily to improve the prevention and the general discipline of the euro countries in good times. "Issue rules, as envisaged by the Advisory Council could help here," said Heise.
According to the violation of the FDP parliamentary report commissioned
report including financial support for Greece with the Treaty on the
Functioning of the European Union (TFEU), designed to ensure sound
fiscal policies in the Member States. FDP
financial expert Frank Schäffler called on the federal government to
take seriously the opinion: "It does not help the alcoholic by him one
puts down a new bottle of liquor," said Schäffler.
what extent bankrupt EU countries by other EU countries can be helped
to actually be read by the Treaty on European Union (EU Treaty, EU
Treaty). However, the wording of the 1992 Maastricht Treaty
signed in are vague and leave room for Intepretationen in one direction
or another. Thus, for example, in Article 103 that
the European community, "not for the commitments of central governments
of Member States (...)"-like, the other opens up the possibility of
Article 100 to help. It says: "If a Member State due
to exceptional events, is beyond its control, the difficulties or is
seriously threatened with severe difficulties, the Council may, acting
unanimously on a proposal from the Commission, the Member State under
certain conditions, Community financial assistance to grant."