Now Germans regret ever championing the euro

As European central bankers move closer to bailing out Greece to stem market panic, there are signs Germany may have deep regrets over the European experiment it long championed and must now take the lead in rescuing.

European officials have yet to outline rescue measures they plan to enact ahead of today's EU summit, but it is already clear that Germany will emerge as the prime underwriter of any loans or debt guarantees to stop the markets savaging weak, peripheral members - the so-called PIGS (Portugal, Italy and or Ireland, Greece and Spain.)

Germany, with assistance from France, will take the lead because the euro currency remains a Franco-German concept. And besides, says Daniel Gros, director of the Centre for European Policy Studies in Brussels, “the Germans are the only ones with deep pockets. If it was just Greece, they could consider letting them go down the drain, but it threatens the entire euro zone.”

But there are warnings there could be stiff domestic German opposition to a Greek bail-out. Germans were unhappy to give up the Deutsche Mark, and now they will be unhappy to become an economic nanny to less robust members of the eurozone.

Germans opposed to a deal will argue that the PIGS violated numerous rules and regulations designed to prevent crises that could force more prosperous members to come to their aid.

“If the German government would just transfer money to Greece, people in Germany would feel their worst fears had come true,” Thomas Mayer, chief economist at Deutsche Bank, tells the New York Times.

Among solutions under discussion is whether Athens should be offered loan guarantees, loans to help meet a looming debt payment, or simply a pledge to buy Greek government bonds.

German apprehension over Greek guarantees is amplified by concern that it could effectively end up guaranteeing the entire PIGS debt - a "too-big-to-fail" hazard on an international scale.

According to the New York Times, German anxiety over a bail-out is exacerbated by German anxiety over its position as economic top dog. This week, Germany lost its title as world export champion to China and there is widespread concern that its population is not only shrinking but also ageing.

However, European leaders have little choice but to back Greece. It is already too late to turn back, says Simon Tilford, chief economist at the Centre for European Reform. “If you have encouraged the markets to believe that support is forthcoming and then it is not, we will see a backlash...” ·