Econ institutes question euro zone aid to Greece

* Think tanks say IMF should take big role in Greek rescue

* Must not set up mechanism to encourage states to seek aid

BERLIN, April 15 (BestGrowthStock) – 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.
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(Reporting by Madeline Chambers, editing by Mike Peacock)

Econ institutes question euro zone aid to Greece