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Italy masked finances worse than Greece

Source: Reuters - Wed 24th Feb 2010

Italy did more than Greece to mask the state of its finances to secure euro zone entry, Greek Deputy Prime Minister Theodoros Pangalos said, adding that Germany's history made it ill-placed to criticise his country.

The European Union has asked Greece to explain reports that it engaged in derivatives trades with U.S. investment banks that may have allowed it to mask the size of its debt and deficit from EU authorities ahead of its entry into the euro zone.

"You simply put some amounts of money in the next year ... it is what everybody did and Greece did it to a lesser extent than Italy for example" Pangalos said in an interview with BBC World Service radio broadcast on Wednesday.

Greece is under mounting pressure from markets and EU policymakers to slash its large debt and deficit. It must prove to Brussels by mid-March that it can meet its ambitious targets to cut the budget shortfall by 4 percent of gross domestic product this year to 8.7 percent.

On Tuesday a German state finance minister said Greece had to help itself out of its precarious fiscal situation and cannot expect Germany or the European Union to bail it out.

Pangalos criticised Germany's attitude towards the Greek crisis, saying Athens had never received compensation for the economic impact of the Nazi occupation during World War Two.

"They took away the Greek gold that was at the Bank of Greece, they took away the Greek money and they never gave it back. This is an issue that has to be faced sometime in the future" he said.

"I don't say they have to give back the money necessarily but they have at least to say 'thanks'" he said. "And they shouldn't complain so much about stealing and not being very specific about economic dealings."

Greek politicians have been outraged by the tone of media coverage of the debt crisis in German media, such as a front-page picture in the weekly magazine Focus of "Venus de Milo"-type statue making an obscene finger gesture with the headline "Swindlers in the euro zone."

Pangalos also said the Greek situation would not have reached this point if there had been stronger leadership within the EU.

"The quality of leadership today in the Union is very, very poor indeed," he said, adding that it had been better in the 1980s when Jacques Delors headed the European Commission and Helmut Kohl, Francois Mitterrand and Margaret Thatcher were in power in Germany, France and Britain.

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