Page last updated at 18:56 GMT, Friday, 5 March 2010

Greece does not need financial aid, says Angela Merkel

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Demonstrators clash with riot police in Athens

German Chancellor Angela Merkel has said Greece does not need financial aid, after talks with Prime Minister George Papandreou in Berlin.

She said Greece has not asked for financial support and that the stability of the eurozone is "assured".

Athens saw its most serious unrest since the financial crisis began, as MPs passed austerity measures.

Rock-throwing protesters outside parliament clashed with police, who used tear gas to disperse them.

The BBC's Malcolm Brabant in Athens said the mood on the streets degenerated after three months of relatively mild protests.

Trouble broke out after the leader of Greece's biggest union, Yannis Panagopoulos of the GSEE was attacked by three assailants, as he addressed demonstrators.

Protestors in Greece
There have been clashes outside the parliament in Athens

TV pictures subsequently showed officers spraying gas into the face of veteran left-winger Manolis Glezos, who is in his mid-80s.

Mr Glezos is one of the country's most beloved figures because of his exploits during the World War Two, when he climbed the Acropolis walls to tear down the swastika during the Nazi occupation.

Greece's two main unions have called another general strike on 11 March, arguing that the austerity cuts put forward by the prime minister are "anti-popular" and "barbaric".

This didn't deter the Socialist-led Greek parliament from approving the measures, which include further tax rises and spending cuts.

'Not a cent'

ANALYSIS
Oana Lungescu
By Oana Lungescu, BBC News, Berlin

Despite mounting speculation about an EU bail-out, most Germans oppose giving aid to a country that has misreported budget figures for years to hide its mountain of debt.

Chancellor Merkel has warned that the euro is in the most difficult phase since its creation.

Few doubt that Mrs Merkel will eventually take action if she sees the stability - or credibility - of the euro under threat.

But with support for her centre-right coalition slipping, Mrs Merkel has reassured voters that she will not use taxpayers' money, nor breach the "no bail-out clause" in the EU's Maastricht Treaty.

A recent poll shows that 71% of Germans think the EU should not help Greece at all. You could call it a culture clash. Germans are big savers, not big spenders.

Talking after the meeting, Mrs Merkel called for an end to market speculation that Greece would default and said that Germany would offer support and expertise.

"Greece and Germany will work together toward a further modernisation of Greece," she said.

She also remarked that Germany and other European Union countries have also had to implement austerity measures amid the global economic crisis.

Help

Previous reports of potential support for Greece had proved unpopular in Germany where many people do not support their taxes being used for bailouts.

Economy Minister Rainer Bruederle said that his government "does not intend to give a cent" to Greece in financial aid.

There are also fears that rescuing one country could encourage others to expect the same.

Meanwhile, Germany passed its budget for 2010, with borrowing set to soar this year.

New borrowing is expected to reach 80.2bn euros ($109bn; £72.5bn) - double the previous highest debt record, set in 1996. However this is less than the 85.8bn euros initially proposed by the government.

Raising funds

On Thursday, the Greek government went to the financial markets to borrow money and saw its 5bn euro ($6.8bn; £4.5bn) bond issue oversubscribed.

Commenting on the move Mrs Merkel welcomed the uptake. "The placement of the bond yesterday went very well and that is of course a good signal for the markets," she said.

But Greece will need to borrow more in the coming months - more than $70bn for the year as a whole.

Mr Papandreou has suggested that Greece might go to the International Monetary Fund (IMF) for help.

But the other countries in the eurozone would not welcome what would be seen as a sign that they could not fix their own problems.

The president of the European Central Bank, Jean-Claude Trichet, has dismissed the idea of the IMF providing financial aid for Greece.

"I do not trust that it would be appropriate to have the introduction of the IMF as a supplier of help through standby or through any kind of such help," he told reporters in Frankfurt on Thursday.

Mr Papandreou will also meet French President Nicolas Sarkozy in Paris on Sunday before travelling to Washington to meet US President Barack Obama on Tuesday.



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