Wednesday, August 24, 2011

Merkel pressured, collateral row rages on in a dying Europe

Germany's Angela Merkel faced mounting domestic criticism of her euro zone policies on Monday, with the Bundesbank slamming an anti-crisis package she agreed to in Brussels last month and a senior ally warning he would vote against key parts of it.

Elsewhere in the currency bloc, a week-long row over Finnish demands that Greece cough up collateral as a condition for new bailout loans raged on, with the Netherlands condemning a bilateral deal between Helsinki and Athens as illegal.

Rating agency Moody's warned that the dispute could end up delaying approval of a new aid package for Greece, driving it into default.

Despite public reassurances from Merkel over the weekend that she would not bow to pressure from European partners and financial markets to agree to joint euro zone bonds, there were signs of growing unease at her policy course from within her conservative camp. more