Econ institutes question euro zone aid to Greece

A planned euro zone aid package for Greece goes against the spirit of the Maastricht Treaty and the International Monetary Fund should take a leading role in any rescue, top European economic institutes said on Thursday.
The eight think tanks said the IMF would be more credible than an EU institution in demanding repayment of financial aid if conditions were not fulfilled and the Fund also had more experience in bailout packages.
Euro zone nations have agreed the terms of emergency loans for Greece if the debt-ridden country is unable to finance itself on the market. Euro zone states would supply two thirds of the loans and the IMF would provide the remainder.
"Such aid contravenes the spirit of the Maastricht Treaty," the institutes wrote in a twice-yearly report to the German government.
"To ensure the currency union is not further damaged, the institutes believe it is crucial for the IMF to be responsible for the supervision of the conditions laid out … and for the decision about freeing up further tranches (of aid)."
To avoid a loss of confidence in the whole euro zone, any mechanism that regularly granted countries aid would be counterproductive, they said.
"The probability that financial aid would be needed would increase and the necessary reforms would be delayed or even choked off altogether, with the danger that an increasing number of aid payments would be needed."
The institutes' comments reflect broad scepticism in Germany about financial aid for Greece. On Wednesday, an academic said he would launch a legal challenge against any aid, arguing it breached the Maastricht Treaty.
The institutes also warned, however, that a serious threat of bankruptcy for any single euro zone country posed major dangers for the whole euro zone.
"These distortions would put a burden on the fragile economic developments in the whole euro zone and bring major costs," said the institutes. Eight think tanks — five from Germany, two from Austria and one from Switzerland — compiled the report for the Economy Ministry which also included their latest economic growth forecasts.