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M. Continuo

Barroso says Greek aid not a bailout: report


    LONDON (Reuters) - European Commission President Jose Manuel Barroso has said any euro zone aid package for debt-stricken Greece would not constitute a bail-out as European Union partners clashed over possible financial support.

    In a interview with the Financial Times published on Tuesday Barroso, hoping to reassure markets by finalizing a financial safety net for Greece, also said he was confident of winning German backing for a deal.

    "I know Chancellor Merkel. She is a committed European and I have no doubts that she will, if needed, be in favor of providing financial assistance to Greece," Barroso told the FT.

    The 16-nation euro zone is divided over whether and how best to provide financial help to Greece, whose struggles to cope with high debt and deficits have plunged the currency bloc into the deepest crisis of its 11-year existence. EU leaders are slated to meet March 25-26 to address the crisis.

    Merkel, facing fierce opposition in Germany to any bail-out, said there was no need to discuss an aid mechanism at the EU summit since Athens had not sought help and it could only be a last resort in case of imminent insolvency.

    Other euro zone members favor action to end a speculative assault on Greek assets that has made it twice as expensive for Greece to borrow as for Germany.

    Seeking to build consensus Barroso repeated an appeal to Germany's interests as the biggest economy in securing a stable single currency area, which is its number one export market.

    "There is no stability without solidarity and no solidarity without stability," he told the FT.

    But any financial support for Athens would likely be challenged in the German Constitutional Court, which set strict conditions barring transfers to other states in the monetary union.

    In an effort to gain support, Barroso stressed any euro zone aid package, which could come in the form of bilateral loans, would not constitute a bailout of another member state.

    "It is not a bail-out," he said.

    "We have checked this from a legal point of view... But no bail-out does not mean no help."

    While some member states have pressed for Greece's crisis to be tackled within the euro zone, Barroso said he would not be opposed to intervention from the International Monetary Fund (IMF).

    "Frankly speaking I never understood these theological debates about the IMF being associated with our efforts," he said.

    (Reporting by Caroline Copley; Editing by Angus MacSwan)