Although European Union commissioners are pushing for quick action on some sort of rescue provisions for heavily indebted Greece, Germany is still disavowing the need for any such proposal - especially one that would dominate the agenda of the March 25-26 summit of EU heads of state.

"There's no looming insolvency," Merkel told German broadcaster Deutschlandfunk on Sunday. "I don't believe that Greece has any acute financial needs from the European community and that's what the Greek prime minister keeps telling me."

But European Commission President Jose Manuel Barroso said on Friday that an EU standby aid package for Greece should be assembled "as soon as possible."

Asking for a hand, or a handout?

Greece may not be asking for immediate loans from its fellow euro-zone members, but it is hoping they can offer some security that would allow them to borrow money at less than the interest rates it is currently being offered.

One way to do that is the establishment of a sort of contingency plan - offers of loans that can be redeemed if Greece finds itself unable to make payments on those loans, despite draconian budget cuts the country approved recently.

EU Commissioner for financial affairs Olli Rehn told the Welt am Sonntag newspaper that the commission "was ready to make a concrete proposal" for Greece, one that would be connected to "strict" obligations.

On Sunday, Merkel told German broadcasters that she would not oppose bilateral loans to Greece to help it make debt payments, as proposed during a meeting of EU finance ministers last week.

"Finance ministers should of course discuss among themselves" what should be done if a member state defaults on those loans, Merkel said, "but no decision has been taken on that... That's why I consider very explicitly that (the subject) remains open."

However, Rehn rejected the idea that there should be severe penalties for members whose deficits don't meet EU standards, saying that prevention was more important.

'Introverted' Germany?

Merkel had said last week that the euro zone should have a way to expel members that repeatedly broke its rules.

Heavily indebted Greece took offense, with the country's deputy finance minister telling Greek television on Sunday that Germany's attitude threatened the currency union's stability.

"Germany is so introverted today that we would not even get a euro zone if we were to discuss its creation today," said Filippos Sachinidis.

Gustav Horn, director of the Macroeconomic Policy Institute in Germany, told the AFP news agency that Merkel's remark "reflects more the mood among the German population rather than a rational suggestion."

The coalition led by Merkel's Christian Democratic Union is behind in the polls ahead of an important regional election in North Rhine-Westphalia this May. Polls indicate that most Germans oppose loaning money to Greece.

But Germany also saw itself the subject of a warning from Rehn, who criticized it for a growing pile of public debt.

"If Germany doesn't improve, there's the danger that it will not meet the guideline that the 2013 national deficit be no higher than three percent of gross domestic product," Rehn said.

svs/AFP/Reuters/dpa
Editor: Andreas Illmer