• Germany's news in English
 
Merkel to meet Sarkozy on Greek crisis
Photo: DPA

Merkel to meet Sarkozy on Greek crisis

Published: 16 Jun 2011 17:07 GMT+02:00

The German government is playing for time in its promotion of a plan to make private investors – often banks – swap the Greek national debt they hold for new seven-year bonds. The idea has been deemed a step too far by the European Central Bank (ECB) and other European governments, notably France.

They want to offer private holders of Greek bonds the option of voluntarily reinvesting the profits they make from Greek bonds in the country. France in particular is concerned that a number of its top banks are very badly exposed to Greek debt, and are themselves suffering in ratings as a result. The idea of forcing private investors to take part in the rescue package is thus unpopular in France, according to Der Spiegel.

The ECB sees the state debt crisis as the greatest danger to the European financial system and warned in its financial stability report on Wednesday that it could be damaged by the continuing problems.

“Any solution must be voluntary enough that a state insolvency or a non-payment rating can be avoided,” said ECB Vice President Vitor Constancio in Frankfurt.

He said that currently the risk of such a financial disaster was limited to Greece, Ireland and Portugal as far as the markets were concerned. This could no longer be guaranteed if a country were to go bankrupt, he said, according to Der Spiegel.

The worry is, the magazine reported, that any intimation of forcing investors to keep their money in the bonds could lead to rating agencies saying that Greece was unable to pay its debts, which could lead to incalculable chain reactions on the finance markets. This could result in a dramatic loss in value of Greek debt, billions of euros worth of which the ECB is holding.

The Handelsblatt daily reported on Thursday that although there was a row of top-rank European meetings scheduled for the next week or so, a decision could be delayed until July. A special meeting of eurozone finance ministers is planned for Sunday while European Union leaders meet in a summit next Friday, where at least a basic declaration should be released on what should be done for Greece.

But Germany would like to put off making a decision on the second European aid package for Greece until September, essentially admitting the EU is unable to act now.

“The argument is – we want to buy time because we don’t know what we should do,” an EU diplomat familiar with the issue told the paper.

EU Currency Commissioner Olli Rehn has suggested the Greek rescue package be split into two parts, with the release of the next tranche of €12 billion in credit on Sunday. An agreement for a longer-term could then be made in July.

“This way we prevent a credit collapse scenario and ease the way for agreement on a mid-term strategy,” he told the Handelsblatt.

The Local/hc

The Local (news@thelocal.de)

Your comments about this article

18:13 June 16, 2011 by harcourt
What an unfortunate picture of the German Chancellor, somebody being a bit mischievous I think !!
18:17 June 16, 2011 by Jack Kerouac
Why is Sakorzy always point at Merkel? This is the second photo I've seen where he's doing that. Point back, Chancellor!
18:19 June 16, 2011 by MJMH
When will the leaders realize that fate is against the EU. The future wants a Europe of separate nations. History says that's the way it always has been.
18:53 June 16, 2011 by derExDeutsche
With a commercial real estate bubble that's about to expire, the bailout figures will rise.
19:34 June 16, 2011 by Englishted
Reminds me of Adolf and Benito apart from one is French not Italian.

But they are planning to divide Europe between them.
21:20 June 16, 2011 by wxman
Wow! That's a switch! When was the last time anyone saw a Frenchman pointing something at a German and they raised THEIR hands??
03:47 June 17, 2011 by jmclewis
Angie why do you not want to stay home?
04:32 June 17, 2011 by mike_1983
Greece should give Germany and France 2 or 3 islands each on 25-30 year loans. Which Germany and France can develop and all the taxes and income derived from the islands can be used to pay off the debt.
08:09 June 17, 2011 by tattooing18
Comment removed by The Local for breach of our terms.
08:30 June 17, 2011 by harcourt
Do you like me get the feeling that tattooing 18 is a bit upset, the medication doesn't seem to be working
08:34 June 17, 2011 by tattooing18
boooooohooooohooooooo
08:53 June 17, 2011 by blacky
islands are have people, houses etc on them,

what is your "new" (old) "model", and what exactly do you mean when you say "give" ????

don't get upset when people call you "nazi", is your history, and you keep think and talk like them ...

@harcourt ... you think 20 beers (or more) is a better medication and the "working" properly ?!?!?!

i think you must visit another doctor .....
09:44 June 17, 2011 by harcourt
@ blacky - To assume that someone who disagrees with the sort of rant such as #10 is a German or even with right wing views is I'm afraid rather naive. May I also remind you that many contributors to these columns are either American or from the UK, together with people to whom English is a VERY good second language.
10:07 June 17, 2011 by blacky
wow .........
18:54 June 18, 2011 by Englishted
@wxman,

Great comment well done.
16:31 June 20, 2011 by Louis Prince
mike_1983

Like the idea, let them work for the money. If they just give the money, the Greeks will never learn.
Today's headlines
Germans hit back at anti-immigrant movement
Demonstrators protest against PEGIDA. Photo: DPA

Germans hit back at anti-immigrant movement

Business leaders, the political class and average Germans are pushing back against a growing anti-immigrant movement, saying it threatens the values and image the country fought hard to establish since the war. READ  

German president urges refugee compassion
Photo: DPA

German president urges refugee compassion

Germany's president appealed in a Christmas message for compassion and openness towards refugees coming to the country, which is grappling with a growing anti-Islam movement. READ  

Reward offered for €150k homing pigeon
A female homing pigeon. Photo: DPA

Reward offered for €150k homing pigeon

A breeder in Düsseldorf has offered a €10,000 reward after thieves stole a homing pigeon worth €150,000 from his aviary. READ  

Royal palace restored to glory after €4.5m refit
The vestibule of the Schloss Charlottenburg, which reopens on Boxing Day Photo: DPA

Royal palace restored to glory after €4.5m refit

The royal palace of Fredrick the Great in Berlin is to fully reopen to visitors on Boxing Day after a 4.5 million euro refit. READ  

Bertolt Brecht statue hit with potato salad
Bertolt Brecht and his salad. Photo: DPA

Bertolt Brecht statue hit with potato salad

Bertolt Brecht's statue in front of the Berliner Ensemble theatre was splattered with potato salad by pranksters early on Tuesday morning, in a protest against supposed gentrification of the capital by wealthy southerners. READ  

'Cursed' Christmas Market catches fire
The ferris wheel at Alexa Christmas Market where a man fell to his death last week Photo: DPA

'Cursed' Christmas Market catches fire

A blaze at one of Berlin's biggest Christmas markets has caused locals to wonder if the place is cursed. READ  

JobTalk Germany: Entrepreneur series
'Don’t be skimpy in rewarding top talent'
Taulia co-founder Bertram Meyer. Photo: DPA

'Don’t be skimpy in rewarding top talent'

In our weekly feature series, The Local looks into a successful entrepreneur's life - the story behind their successes, major challenges and how being an entrepreneur changed them forever. This week, Sparsh Sharma talks to Bertram Meyer, one of the four German co-founders of Taulia. READ  

Terror alert 'higher than in decades'
A police armed response unit (SEK) training in North Rhine-Westphalia in August. Photo: DPA

Terror alert 'higher than in decades'

A leaked government report shows that security authorities believe the threat of a terrorist attack in Germany is higher than at any time since the late 1970s. READ  

Wet, windy, stormy Christmas in store
Nobody's dreaming of a wet Christmas Photo: DPA

Wet, windy, stormy Christmas in store

Those hoping for a traditional white Christmas in Germany are going to be disappointed, with weathermen saying Tuesday the current wet, windy and stormy weather is set to stay. READ  

Merkel to have a chilly Ukraine Christmas
President Poroschenko of Ukraine greeting soldiers in a tank on December 6th. Photo: DPA

Merkel to have a chilly Ukraine Christmas

Russia, Ukraine, France and Germany agreed on new peace talks this week on Christmas Eve and Boxing Day, Ukrainian President Petro Poroschenko announced on Monday evening. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
Gallery
Top 12 German idioms
Willy Brandt at his inauguration in 1972. Photo: DPA
National
Willy Brandt: the man, the chancellor... the airport?
Dresden skyline and river by night. Photo: DPA
Politics
What does Dresden have against Muslims?
Sponsored Article
Why are these International Baccalaureate students cheering?
Germany's national football team lifts the World Cup trophy
Gallery
Germany's most-Googled words of 2014
National
Why has The Local got a new logo?
Photo: DPA
National
This German was abducted and tortured by the CIA
Culture
10 top tips for partying in Germany
Sponsored Article
Top ten gifts for an expat Christmas
Photo: DPA
Technology
What does the Chancellor see as the future of the internet?
Photo: DPA
Culture
Stuff your face with these festive German cookies
Photo: DPA
Culture
What do beer, breakfast cereal and dildos have in common?
Culture
The Local's guide to German Christmas markets
Sponsored Article
Top five quirky Christmas jumpers
Photo: DPA
Culture
Get ready for Christmas like a German. We tell you how.
Photo: DPA
Munich
She did what with her dead mother?
Photo: DPA
National
Germany still paying for crisis fall out
Photo: DPA
Culture
Saxon wurst is the worst, Christmas market declares.
Photo: DPA
Politics
Can 'sorry' ever be enough for the Linke?
Photo: DPA
Berlin
The Local's series on 25 years since the fall of the Berlin Wall
Photo: DPA
Gallery
See how Berlin has changed in 22 photos
Photo: DPA
Business & Money
JobTalk: All you need to know about working in Germany
National
Share news tips with The Local Germany
Latest news from The Local in Austria

More news from Austria at thelocal.at

Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

Latest news from The Local in Denmark

More news from Denmark at thelocal.dk

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in France

More news from France at thelocal.fr

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

Latest news from The Local in Sweden

More news from Sweden at thelocal.se

3,207
jobs available
The Local Spain is hiring!
The Local is seeking a new editor for our site in Spain to join our growing team of internationally-minded, driven, ambitious and clued-up journalists.
Details and how to apply
Toytown Germany
Germany's English-speaking crowd