Euro crisis down to confidence, not currency, says German Foreign Minister

Euro crisis down to confidence
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Story highlights

  • Westerwelle: the euro is stable, but the 'real crisis is regaining market confidence'
  • German foreign minister in Hong Kong as part of Germany's two-day summit in China
  • Westerwelle said it was essential that Greece and others to maintain paths toward reform
  • "There can be no good future for Germany without a good future for a united Europe"

The real crisis confronting the eurozone is regaining market confidence, not the euro, German Foreign Minister Guido Westerwelle said Friday.

"Some people wonder if we're overcoming the euro crisis the right way," said Westerwelle, speaking at the Asia Society in Hong Kong. "We do not have a euro crisis, we have a debt crisis which has morphed into a crisis of confidence. The euro is stable and is the number two reserve currency in the world."

To bolster market confidence in the eurozone, Westerwelle -- who is part of the cabinet-level entourage traveling with German Chancellor Angela Merkel for her two-day summit in China -- said it was essential that Greece and other debt-laden economies in Europe maintain paths toward reform.

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Last week, Greek Prime Minister Antonis Samaras met with German Chancellor Angela Merkel in Berlin to ask for more "breathing space" for Greece to implement austerity reforms. The troika -- consisting of the European Union, the European Central Bank and the International Monetary Fund -- is due to report on Greece's progress next month.

"I don't want to be part of this Greece bashing, because it's a real challenge for them. I feel for the people on the streets of Greece, because the people weren't responsible for what their leaders missed in the past decade.

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"We feel solidarity but we have to insist they fulfill what they promised," Westerwelle continued. "We can't allow them to weaken the reform agenda. It would have a very negative effect in trying to restore confidence to Greece and the European Union."

He also questioned how the Spanish government could be persuaded to stay on path if any agreement with Greece was weakened.

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Westerwelle pointed to Germany's own debt woes in the wake of West Germany's reunification with East Germany during the 1990s. "It was only 10 years ago that Germany was the sick man of Europe. Reforms may be painful, but they will pay off and that's what we Germans have experienced first hand," he said.

Even as he advocates strict adherence to austerity measures, Westerwelle has been a strong voice against politicians who suggest Greece should soon exit the eurozone. "The bullying against individual euro countries to achieve political gains must stop," Westerwelle said after Alexander Dobrindt, the executive secretary of the Christian Social Union of Bavaria, suggested a Greek departure was imminent, the German daily Rheinische Post reported on Monday.

Earlier this month, Westerwelle warned on the "dangerous tone" arguments on European Union were taking. "We must take care not to talk Europe down," he said in a statement, released after Italian Prime Minister Mario Monti told a German paper that eurozone tensions "bear the traits of a psychological dissolution of Europe."

As developing economies like China and India create more regional centers of financial power, a strong EU is "life insurance" for Germany's future, especially as the eurozone represents only about 9% of the world population, Westerwelle continued. "Europe and European unity is not only our destiny, but our desire," he said.

"There can be no good future for Germany without a good future for a united Europe," Westerwelle said.

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