“There is a lot of distance still to cover” for Athens, Merkel told MPs on Thursday morning, saying that Greece must make “a show of strength” in the coming months.
She added that she did not hold out hope for a sudden improvement following her meeting with Greek Prime Minister Alexis Tsipras next Monday either.
She insisted that Germany was ready to find a way forward in co-operation with Greece despite their different views.
"I am looking forward to his visit. We wil have time to talk extensively with each other, perhaps even to have a discussion," she joked.
“The world is looking at us, and how we deal with individual countries in the Eurozone,” she said.
But she added that Greece must bring its budget under control if it ever hopes to survive without depending on foreign cash injections.
No agreement reached in a planned conversation with the Greek Prime Minister at the edges of the Brussels meeting could replace Greece's existing agreements with its creditors, the European Commission, the European Central Bank and the International Monetary Fund, she said.
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On the official agenda for the Brussels summit are the development of an EU-wide Energy Union, the implementation of the Minsk Accords in Ukraine, and free-trade agreements include the Transatlantic Trade and Investment Partnership (TTIP).