Germany keeps up austerity drive with Central Bank help

By Agence France-Presse
Sunday, September 9, 2012 8:50 EDT
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Angela Merkel via AFP
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Germany’s finance minister warned Sunday that debt-laden eurozone states must stick to promised reforms and cuts despite last week’s offer of help from the European Central Bank that calmed markets.

In a wide-ranging interview with the Bild am Sonntag weekly, Wolfgang Schaeuble also expressed confidence that Germany’s top court would not shoot down the eurozone’s proposed new rescue fund on Wednesday.

“It would be a grave mistake to interpret the ECB decision incorrectly as meaning that (reform) efforts can now be slackened. The opposite is true,” said Schaeuble.

“The problems of the eurozone can only be tackled where they are at the moment: in the member states,” he added, pointing to the need to cut public deficits and boost competitiveness.

In a decision that sent markets booming, ECB President Mario Draghi announced Thursday the bank would buy unlimited amounts of the bonds of struggling countries to bring down their soaring borrowing costs.

While Chancellor Angela Merkel insisted the ECB was acting within its mandate, several politicians and media in Germany slammed the decision as providing a “blank cheque” to profligate euro countries.

The head of the powerful German central bank, Jens Weidmann, put out a statement shortly after Draghi’s announcement to express his reservations, although his was the only “dissenting view.”

Schaeuble also said he was not concerned by a closely watched ruling by Germany’s Constitutional Court on legal challenges to the ESM bailout fund and the EU’s fiscal pact for greater budgetary discipline.

“When we set up the ESM, we checked carefully that it did not break the Constitution,” Schaeuble said.

“And one should not forget that the Constitutional Court has never judged that the course of European integration has contravened the constitution,” added the minister.

In a ruling that will be watched nervously by the financial markets, the court will on Wednesday rule on the validity of a series of legal complaints against the ESM, which has delayed the 500-billion-euro fund coming into force.

Agence France-Presse
Agence France-Presse
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