ECB Accused of Blackmailing Greece as Grexit Grows Popular

More Europeans are accusing finance ministers of blackmailing Greece, leading to suspicion that Germany is pressuring the country to cut welfare spending on its poorest citizens so that it can borrow more debt from the European Central Bank.

More Europeans are accusing finance ministers of blackmailing Greece, leading to suspicion that Germany is pressuring the country to cut welfare spending on its poorest citizens so that it can borrow more debt from the European Central Bank.

Tensions mounted in a meeting of European lawmakers at the European Parliament in Brussels on Tuesday, when Mediterranean lawmakers accused the ECB and the German Bundesbank of attempting to blackmail Greece by requiring more cuts to welfare spending in exchange for access to lines of credit from the ECB. Portuguese European Parliament member Marisa Matias, of the Portuguese Left Bloc party, accused the ECB of blackmailing Greece by refusing to accept the country’s debt as collateral in the central bank’s open market operations.

The ECB’s decision to reject Greek debt as collateral has largely been viewed as a condition set by the German Bundesbank to ensure that the ECB’s quantitative easing program, which is set to purchase over a trillion euros of debt, does not include Greek debt. As a result, Greece has sought emergency funds from their own central bank, but the country is set to default on some of its debt if it does not receive further assistance from the ECB in the next month.

Draghi’s Denial

European Central Bank President Mario Draghi fought accusations that the ECB or the European Parliament were attempting to blackmail Greece. “It’s bit rich when you look at our exposure to Greece…What sort of blackmail is this? We haven’t created any rule for Greece, rules were in place and they’ve been applied,” he said, alluding to requirements that Greece maintain a large budget surplus to receive support for its large debt load.

Draghi also said that Greece could collateralize its debt in future transactions if the country satisfies “several conditions” relating to its current budget surplus.

Greece expects to have a primary budget surplus of 3.3 billion euros in 2015, or 3% of its GDP. The country has also beaten its budget targets for the last three years. Greece is also on track to cut spending by around 2.6 billion euros in 2015.

Merkel Prods for Austerity

Despite beating budget targets for three years, Greece is receiving continued pressure from Angela Merkel, the German Chancellor, to ramp up its focus on austerity and budget cuts.

Angela Merkel said Tuesday that Greek Prime Minister Alexis Tsipras should ensure that its government does whatever it takes to qualify to borrow more funds from the ECB to pay back its debt.

Despite the chancellor’s position on Greece, the German government emphasized the need for the European Union to stay whole even as more Germans are calling for Greece to exit the Eurozone.

In a statement to the press, Merkel’s Deputy Foreign Minister Michael Roth reiterated the need for the European Union to show unity. Minister Roth told reporters that a united Europe “can successfully face the various crises, including in foreign and security policy,” adding that a Grexit “would have grave political consequences.”