France, Germany Stress Need for Unity
By NATHALIE BOSCHAT
PARIS—Government officials from France and Germany went out of their way Monday to stress the need for a unified euro zone even as intensifying worries over Greek debt piled pressure on the currency bloc.
In a Europe Day speech, French Prime Minister Francois Fillon on Monday said it's paramount that euro-zone states continue to show solidarity towards one another—signaling France could agree to go further to help Greece meet its funding needs for next year. Record-high yields on Greek government debt effectively bar the country from tapping financial markets.
"Continuing to honor our duty of solidarity is imperative," Mr. Fillon said. He recalled that France had stressed the need for "unfailing solidarity" within the euro zone, particularly with southern peripheral countries, early on in the bloc's government debt crisis.
Mr. Fillon's comments come on the same day Standard & Poor's dealt Athens another blow, downgrading Greek government debt further into junk territory. The ratings agency cited concerns that Greece's private creditors might have to accept a rescheduling of the country's debt.
Mr. Fillon suggested that additional support on the part of euro-zone peers could come only in connection with in-depth economic and budgetary reforms in debt-ridden countries.
He also called for increased convergence of economic policies in order to close competitiveness gaps within the euro area "that have threatened to make the system implode." Mr. Fillon added that the more stringent stability pact recently agreed on should help achieve this goal.
Worries over Greece's fiscal situation came to a head over the weekend after German paper Der Spiegel reported that finance ministers from the euro zone's main countries had convened for secret talks in Luxembourg to discuss Greece's exit from the euro area.
As the Greek government denounced the report, Greek Finance Minister George Papaconstantinou said Saturday that Athens might sell bonds to the euro zone's bailout fund if it can't sell to private investors, acknowledging the country's dire funding situation.
A spokesman for German Chancellor Angela Merkel Monday said a possible exit of Greece from the euro zone has never been a point of debate and isn't one now.
"Such a report has nothing to do with reality," said Ms. Merkel's spokesman Steffen Seibert Monday, referring to the Spiegel report.
Meanwhile, a spokesperson for the German finance ministry said Berlin won't discuss Greece's financing needs further until the release of the next report by the International Monetary Fund and the European Commission, which are reviewing progress made under the country's austerity program.
Despite the show of unity by France and Germany, dissenting voices are beginning to sound in Europe. Up until now, calls to exit the euro have mainly come from extremist political parties such as France's far-wing conservative party Front National—whose popularity in the polls is steadily rising. But the latest crack in Europe's united front came from one of Germany's leading parties.
Frank Schaeffler, a lawmaker from the liberal Free Democratic Party or FDP, the junior partner in Ms. Merkel's ruling coalition, Monday said Greece and other countries should have the option to leave the euro zone if they wish to do so.
"There has to be a possibility for an orderly exit from the euro zone," Mr. Schaeffler said. "If Greece wants that, its euro-zone partners should positively support it." Mr. Schaeffler, who said he has the support of other FDP lawmakers, also rejects the planned European Stability Mechanism, which is slated to replace the bloc's current bailout facility in 2013.
Quizzed Monday about whether France would consider a rescheduling of Greece's debt, French Finance Minister Christine Lagarde declined to comment,
saying only that Greece has funding problems that will have to be looked into at the next meeting of European finance ministers in Brussels next Monday.
But analysts suggested the latest developments could usher in a new chapter of the euro-zone debt crisis. "The official line that Greece has a liquidity and not a solvency problem is showing its cracks, putting into question the whole framework of the financial support," BNP Paribas said in a research note Monday.