UPDATE 1-Germany to back "last resort" aid mechanism-Merkel

* Germany to work with France for agreement

* Sanctions must be stepped up for budget sinners

* Greece does not need aid now – Merkel

(Adds quotes, details)

BERLIN, March 25 (BestGrowthStock) – Germany will urge European
Union leaders to agree International Monetary Fund and bilateral
European aid could be used as “last resort” for Greece if it
reached the brink of insolvency, Chancellor Angela Merkel said.

Speaking ahead of a summit of EU leaders in Brussels later
on Thursday, who have been split over what help to give Greece
to resolve its debt crisis, Merkel said Germany was prepared to
sanction a mix of the two measures to bail out a country if it
could no longer fund itself on capital markets.

“At the summit today and tomorrow, the German government
will push its view that any emergency support should come from a
a combination of the IMF and joint bilateral help from the euro
zone. But again I say, this can only be a last resort,” Merkel

“I will argue strongly that this decision — that of IMF
plus bilateral aid — must be made. And we will again work very
closely with France on this,” she said in a government
declaration to the lower house of parliament.

Germany had staunchly resisted calls from other states to
promise help for heavily-indebted Greece, and Merkel said she
was not doing so now.

“I repeat again, this is not about concrete aid, it’s about
specifying and carrying over the decision made on Feb. 11,” she
said, referring to a pledge made last month by EU leaders to
take coordinated action to uphold stability if necessary.

Greece was not insolvent and had pledged to carry out an
“ambitious programme” of spending cuts, Merkel said.

“A good European is not necessarily one who offers help
quickly. A good European is one that respects the European
treaties and national rights so that the stability of the euro
zone is not damaged,” Merkel said.

Merkel added that the instruments available to safeguard
monetary union were not sufficient at present, and that steps
would have to be taken to correct this.

“We must put an end to using tricks,” she said.

If countries did not play by the rules, a mechanism needed
to be put in place to restore order without destabilising the
currency bloc, Merkel said.

“That is why I will also urge that the necessary changes to
the (EU) treaty are made so that unwanted developments can be
tackled with suitable sanctions, quicker and earlier.”

Merkel said EU budgetary rules were not cut out for “a
deliberate undermining of (their) criteria, as we were forced to
undergo with Greece”.

“If a member of the currency union were to become insolvent
in the current situation, it would mean grave risks for all in
Europe,” Merkel said.

(Reporting by Dave Graham, Brian Rohan and Noah Barkin, editing
by Mike Peacock)

UPDATE 1-Germany to back “last resort” aid mechanism-Merkel