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Berlin firmly against debt 'haircut' for Greece
Published: 26 Nov 12 12:36 CET | Print version
Online: http://www.thelocal.de/money/20121126-46393.html
Germany is hoping eurozone finance ministers can clinch a deal on unlocking vital funds for Greece later on Monday but strongly rules out accepting losses on its Greek debt holdings, a spokesman said.
Later on Monday, eurozone ministers will attempt for the third time to clinch agreement on unfreezing a vital instalment of bailout aid worth about €31.2 billion as Greece stares again into the bankruptcy abyss.
But Seibert stressed again Berlin's opposition to a so-called "haircut" on Greece's debt - meaning that other eurozone governments and the European Central Bank would accept a write-down on the debt they currently hold.
"This official sector haircut is also not a topic for other countries in the eurozone. That's why the finance ministers will not be talking about it. It's also not a topic for the ECB," insisted Seibert.
Greece's private creditors have written off more than €100 billion in debt, and the IMF has urged the ECB, a public creditor, as well as other eurozone governments, to accept this solution.
With less than a year until elections, Germany is unwilling to take losses on its holdings of Greek debt and the ECB believes it is tantamount to monetary financing of a eurozone country - strictly forbidden by its founding treaty.
Seibert also pointed to legal complications."It is true that there are significant political objections to such a haircut. But above all, there are clear legal objections and not just in Germany," he said.
He noted that German budgetary law as well as EU laws stating that no country may bail out another stood in the way of a haircut.
Politically, he said that if Greece were granted a haircut, then other countries under an EU bailout programme might also want one.
AFP/jlb
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Your comments about this article:
Christine Lagrade has hit out at EU need to write off some of Greece's debt to make it manageable. This has put her at odds with Chancellor Merkel who is facing reelection this coming September.
I would assume after the election the Chancellor would be more in favor of the so called hair cut.