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June 29, 2017

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ECB action draws fire from German commentators

BERLIN--The European Central Bank's master plan to help prop up the battered eurozone prompted scathing criticism among German commentators Friday who questioned the government's muted response.

Despite several European Union leaders welcoming ECB chief Mario Draghi's crisis strategy for driving down borrowing costs for struggling eurozone members, it failed to convince many in Germany, Europe's effective paymaster.

"A Black Day for the Euro," "Over the Red Line" and "Pandora's Box Opened Forever" read some press headlines about the bond buying program in a country historically fearful that intervention could fuel inflation.

Half of Germans oppose the ECB buying sovereign bonds of crisis-wracked eurozone states compared to 13 percent in favor, according to a poll published Friday but conducted by Infratest dimap before Draghi's announcement.

"It's not the beginning of monetary financing of sovereign debt," Finance Minister Wolfgang Schaeuble insisted in Stockholm, bashing the German media as "very nervous" in its criticism of Thursday's ECB decision.

Chancellor Angela Merkel implicitly backed the action but would only say just minutes after it was unveiled on Thursday that the Frankfurt-based central bank was acting "within its independence and within its mandate," a message her spokesman later repeated to reporters.

On Friday however, Merkel welcomed conditions attached to the new bond-buying programme, saying governments also had work to do.

"The ECB made clear yesterday ... that the future of the euro will to a large extent be determined by political action and that the conditionality is a very important aspect," Merkel said after talks with her Austrian counterpart Werner Faymann.

"Responsibility and checks, or help and checks and conditions, always go hand in hand," she told reporters in Vienna.

"That is the way we have always chosen and so I believe we have the political duty to solve politically the difficulties that we have together. And the ECB is playing its role with its particular responsibilities."

But hard on the heels of a weeks-long assault against the plan by the head of the German central bank, or Bundesbank, newspapers of different political stripes accused the ECB of crossing a red line from which no good could come.

"Saving the euro at all cost can economically be a disaster. That is one red line which may not be crossed. The other limit is the law" wrote the center-left Sueddeutsche Zeitung newspaper Friday.

"A euro community based on one treaty breach after another is on shaky ground," it added.

The Handelsblatt business daily pondered why Merkel, who is now in the countdown to new elections which must be held by October 2013, had failed to clearly come out for or against the ECB plan.

"One way to read it is the chancellor does also have misgivings about the buying of sovereign bonds of crisis countries, but no longer feels in a position to stop the phalanx of supporters of the Draghi model," it said online.

Alternatively, Merkel did support the ECB action but could not openly enthuse about it because of domestic political pressure from euro-skeptic members of her center-right coalition, it added.

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