Loose lips

Despite German Chancellor Angela Merkel warning her government not to make any bold statements about a possible Greek bankruptcy, junior coalition partner the Free Democrats (FDP) are continuing to talk freely.

In Wednesday's edition of Financial Times Deutschland, FDP Secretary General Christian Lindner said that long-term clarity on the issue, desired by the German people as well as the markets, could not be achieved with a vow of silence.

He said the FDP did not want to talk up the chances of a default, but Merkel's appeal to stop discussing it was "just an attempt to prevent an overdue debate."

Vice Chancellor and Economy Minister Philipp Rösler (FDP) wrote a newspaper commentary on Monday saying that a controlled Greek default was one possible outcome of the euro crisis, comments which were followed by a drop in the markets.

In response, Merkel quickly moved to stress that everyone should "weigh their words carefully." In a dig at her coalition partners she told RBB-Inforadio on Tuesday it was important not to cause "unrest in the financial markets."

Rösler's defenders

However, Rösler's FDP colleagues seem intent on defying Merkel and discussing the issue further. FDP party chief Rainer Brüderle also backed up Rösler on Wednesday, saying European finance ministers have not in principle ruled out an orderly insolvency.

Brüderle told state television ARD's Morgenmagazin that Rösler had positioned himself "on exactly the same lines as what European ministers have discussed."

In Greece's case, Brüderle intimated that the "participation of private creditors" would be necessary if the country cannot handle its debt.

Other prominent FDP politicians including Justice Minister Sabine Leutheusser-Schnarrenberger and Saarland's Economy Minister Christoph Hartmann also expressed their support for Rösler in the Wednesday morning press.

CDU rally for caution

Politicians from the larger partner in the governing coalition, Merkel's Christian Democrats (CDU), were less supportive of the FDP speaking out on the issue.

Michael Meister, deputy party chief of the CDU, told the Kölner Stadt-Anzeiger that there was no rational explanation for Rösler's behavior.

"If there's already a basic problem of trust, and one continues to speculate, then certainly no new trust can be created," said Meister.

Finance Minister Wolfgang Schäuble also echoed Merkel's caution of speculation, saying words needed to be dealt with "carefully."

"European partners will do their best to give Greece the time and space to implement the necessary and comprehensive reforms," Schäuble told the Rheinische Post.

Later Wednesday, Merkel will hold a conference call with French President Nicolas Sarkozy and Greek Prime Minister George Papandreou in an attempt to soothe the markets.

Author: Catherine Bolsover (AP, dpa, AFP)
Editor: Martin Kuebler