By Harriet Torry
BERLIN--German Finance Minister Wolfgang Schaeuble doesn't think
the recent political upheaval in Portugal threatens to unleash a
crisis of the single currency, he said Thursday, as financial
markets now judge the euro to be sufficiently stable to withstand
domestic upheavals in member states.
The resignations of Portuguese Foreign Minister Paulo Portas and
Finance Minister Vitor Gaspar earlier this week have cast doubt
over whether Portugal can stick to austerity measures under the
terms of its 78 billion euro ($101.2 billion) rescue two years
ago.
The German Finance Minister brushed off concerns the political
crisis there may throw the whole bloc into chaos, saying such
developments are "normal in democracies," but said he nonetheless
regrets the resignation of Mr. Gaspar.
Mr. Schaeuble also acknowledged that the euro zone still faces
challenges, one of which is the credit crunch for small and
medium-sized companies which is choking growth in struggling
economies.
Mr. Schaeuble met Thursday with his Spanish counterpart in
Berlin to sign off on previously-announced plans for Germany to
lend small and medium-sized companies in recession-hit Spain EUR800
million via German state-owned bank KfW and Spanish state-owned
business lender Instituto de Credito Oficial.
Spanish Finance Minister Luis de Guindos told reporters there is
no conditionality attached to the loans.
Small and medium-sized companies in Spain still face trouble
accessing credit from banks at reasonable rates despite the ongoing
low interest rates from the European Central Bank.
The German move, which it has said it will emulate in Greece and
Portugal to differing degrees, is aimed at boosting employment and
growth. German Economics Minister Philipp Roesler said at the press
conference a strong Spain is in Germany's interest.
Write to Harriet Torry at harriet.torry@dowjones.com