German lawmaker sends Greece tough warning

A member of Germany’s ruling party warned Monday his country would not hesitate to refuse further aid to Greece if it fails to meet the harsh austerity conditions of its existing bailout.

Michael Fuchs, a senior member of German Chancellor Angela Merkel’s Christian Democrats, said Greece must implement the economic reforms demanded by its creditors.

His comments came the same day as the Greek statistical authority said the country's economy contracted by 6.2 per cent in the second quarter from the same period last year.

That compared with a downturn of 6.5 per cent in the first quarter of this year.

Debt-crippled Greece has been in a deep recession for five years, and the cumulative shrinkage is expected to reach 20 per cent at the end of this year.

The government has said the contraction could exceed seven per cent in 2012.

Berlin can't force Greece out

Germany has been a major contributor to Greece's bailout, and Fuchs suggested Greece should voluntarily leave the eurozone if it fails to bring in the necessary spending cuts.

He told the newspaper Handelsblatt that he would prefer it stay, and noted that Berlin can’t force Athens out of the 17-nation currency bloc.

"But I’m working on the assumption that the Greek government knows what it needs to do if it can’t, or won’t, meet the reform demands," he said.

Fuchs, who is part of the pro-business wing of the party, also said Greece must fulfill every single demand agreed with its creditors.

"Even if the glass is half full, that isn’t enough for a new aid package," he said.