• Germany's news in English

Merkel to meet Sarkozy on Greek crisis

The Local · 16 Jun 2011, 17:07

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

Facebook Twitter Google+ reddit

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.

Story continues below…

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)

Facebook Twitter Google+ reddit

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
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

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

Like the idea, let them work for the money. If they just give the money, the Greeks will never learn.
Today's headlines
Obama to visit Berlin in last presidential trip to Germany
President Barack Obama and Chancellor Angela Merkel during a Berlin trip in 2013. Photo: DPA.

The White House announced on Tuesday that US President Barack Obama will be paying one last unexpected visit to the German capital - his last before he leaves office.

Hostility towards minorities 'widespread in Bavaria'
A village in southern Bavaria. Photo: DPA.

Hate and hostility towards groups deemed to be different are not just sentiments felt by fringe extremists, a new report on Bavaria shows.

Hated RB Leipzig emerge as shock challengers to Bayern
RB Leipzig. Photo: DPA

RB Leipzig's remarkable unbeaten start to the Bundesliga season has seen them suddenly emerge at the head of the pack chasing reigning champions and league leaders Bayern Munich.

Munich taxi driver in hospital after attack by British tourists
Photo: DPA

A taxi driver had to be hospitalized in Munich on Monday evening after three British tourists refused to pay their fare and then attacked him.

German police carry out nationwide anti-terror raids
Police outside a building in Jena during raids on Tuesday. Photo: DPA

Police forces in five German states carried out raids on Tuesday morning with the aim of tackling the financing of terror groups, police in Thuringia have reported.

The Local List
10 ways German completely messes up your English
Photo: DPA

So you've mastered German, but now it's time to learn English all over again.

Iconic German church being eroded away by human urine
Ulm Minster towering over the rest Ulm surrounding the Danube. Photo: Pixabay

It will now cost you €100 to spend a penny. That’s if you get caught choosing to pee against the world-famous Ulm Minster.

German small arms ammo exports grow ten-fold
Photo: DPA

The government has come in for criticism after new figures revealed that Germany exported ten times the quantity of small arms ammunition in the first half of 2016 as in the same period last year.

14-year-old stabs 'creepy clown' in prank gone wrong
File photo: DPA.

A 16-year-old in Berlin decided he wanted to scare some friends, but his plot backfired in a violent way.

Four Ku Klux Klan groups active in Germany, says govt
An American member of the KKK at a gathering in Georgia. Photo: EPA.

The German government estimates that there are four Ku Klux Klan (KKK) groups currently active in the country, according to a report by the Süddeutsche Zeitung (SZ) on Tuesday.

Germany's 10 most weird and wonderful landmarks
Sponsored Article
Last chance to vote absentee in the US elections
10 things you never knew about socialist East Germany
How Germans fell in love with America's favourite squash
How I ditched London for Berlin and became a published author
12 clever German idioms that'll make you sound like a pro
23 fascinating facts you never knew about Berlin
9 unmissable events to check out in Germany this October
10 things you never knew about German reunification
10 things you're sure to notice after an Oktoberfest visit
Germany's 10 most Instagram-able places
15 pics that prove Germany is absolutely enchanting in autumn
10 German films you have to watch before you die
6 things about Munich that’ll stay with you forever
10 pieces of German slang you'll never learn in class
Ouch! Naked swimmer hospitalized after angler hooks his penis
Six reasons why Berlin is now known as 'the failed city'
15 tell-tale signs you’ll never quite master German
7 American habits that make Germans very, very uncomfortable
Story of a fugitive cow who outwitted police for weeks before capture
Eleven famous Germans with surnames that'll make your sides split
The best ways to get a visa as an American in Germany
jobs available
Toytown Germany
Germany's English-speaking crowd