Europe divided on aid to Greece before summit

BERLIN: European leaders sent out conflicting signals at the weekend over aid to Greece, with Germany's Angela Merkel urging Athens to solve its debt problems alone and Italy's Silvio Berlusconi strongly backing EU support.

The 16-nation euro zone is divided over whether and how best to provide financial help to Greece, whose struggles to cope with soaring debt and deficits have plunged the currency bloc into the deepest crisis of its 11-year existence.

Chancellor Merkel, who faces a key state election in May, is keenly aware that the German electorate overwhelmingly opposes a bailout for Greece and has hardened her line against the EU making a concrete pledge of financial support.

An FT/Harris poll to be published in Monday's Financial Times shows a third of Germans think Greece should be asked to leave the euro, while 40 percent believe Germany would be better off outside the currency bloc.

Merkel's stance pits her against Brussels and major European partners, who favour strong action to end a speculative assault on Greek assets that has made it twice as expensive for Greece to borrow as for Germany.

On German radio Merkel denied Greece had any "acute financial needs" and rejected suggestions by European Commission President Jose Manuel Barroso that EU leaders agree a standby aid package for Athens at a summit this week.

"I don't see that Greece needs money at the moment and the Greek government has confirmed that. That's why I'd urge us not to stir up turbulence in the markets by raising false expectations for Thursday's council meeting," Merkel said, referring to the March 25-26 summit.

"Aid will not be on the agenda at the meeting on Thursday because Greece says itself it doesn't need help right now."

Barroso told Monday's edition of the Handelsblatt newspaper that the European Union urgently needed to resolve the Greece problem "regardless of the political agenda in member states".

"Securing the stability of the currency union is in Germany's interest," Barroso told the German daily. "I'm sure Germany will make a constructive contribution to resolving the current crisis."