Report: Economist Plans Legal Action if Greece Rescued

Tuesday, 23 Feb 2010 02:48 PM

 

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A German economics professor and euro critic plans to take legal action if Germany and other European Union countries grant financial aid to debt-stricken Greece, he said in a newspaper interview published on Tuesday.

Wilhelm Hankel, who unsuccessfully sought to prevent the introduction of the euro by going to Germany's constitutional court with three colleagues in 1998, said they were ready to do the same again.

"The four of us have decided on that," Hankel, 81, told the Handelsblatt business daily, adding that they would perhaps even go to the European Court of Justice.

"The legal ban on financial support for Greece is clear," he said. "There is no doubt about the bail-out ban and the European Central Bank can't be made into a kind of bad bank either."

Some legal experts have questioned the legality of aiding Greece but others argue the main barrier to aid is political.

Rules on assisting member states are laid out in the EU treaty, whose contents have been interpreted in various ways.

One article in the EU treaty states that both the EU and a member state "shall not be liable for or assume the commitments of central governments ... without prejudice to mutual financial guarantees for the joint execution of a specific project."

However, another article says that the EU Council may grant assistance "where a member state is in difficulties or is seriously threatened with severe difficulties caused by natural disasters or exceptional occurrences beyond its control."

A German Finance Ministry spokesman said on Monday that Germany has made no decision on aid for Greece.

German magazine Der Spiegel reported at the weekend the Finance Ministry had sketched out a plan under which euro zone members would provide 20-25 billion euros of aid to Greece in the form of loans and guarantees.

Chancellor Angela Merkel's government has so far deflected appeals to promise aid for Greece, despite fears that failure to help Athens could threaten the euro.

Germany in public argues that leniency would take pressure off Athens and other euro zone debtors to cut their budget deficits. Behind the scenes, lawmakers acknowledge that Berlin is preparing measures if a rescue becomes inevitable.

© 2014 Thomson/Reuters. All rights reserved.

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