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Berlin and Paris call for urgent Greece bailout

The Local · 17 Jun 2011, 18:00

Published: 17 Jun 2011 13:06 GMT+02:00
Updated: 17 Jun 2011 18:00 GMT+02:00

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"We need a solution as soon as possible so that we have clarity ... We have been talking about this for the whole of May and June, discussing the same issues again and again without resolving them," Merkel said.

"Germany and France are determined at the upcoming EU summit ... to say that we want a quick solution," Merkel told reporters in Berlin after talks with French President Nicolas Sarkozy in Berlin.

Sarkozy agreed, saying: "France and Germany want this new programme to be worked out as quickly as possible. There is no time to lose," he said. Both said that private investors should be involved in the new package on a voluntary basis.

"We want involvement of the private sector on a voluntary basis. I want to stress this. There is no legal basis so far for there being obligatory involvement," Merkel said.

"This must be worked out together with the ECB (European Central Bank) so that there are no contradictions with the ECB," she said.

Merkel heads a group of top eurozone economies that had been pressing for private investors to contribute up to a third of the second rescue package by accepting later repayment on their Greek bonds.

But Sarkozy backs the ECB and the European Commission, which want the private sector to contribute on a "voluntary" basis, hoping thereby to avoid any action that ratings agencies might deem a default and which would likely cause chaos throughout the eurozone.

Amid a raft of warnings that Berlin's terms for the eurozone's fourth emergency bailout could trigger a potentially disastrous Greek debt default, Merkel appeared to back down after the talks with Sarkozy in Berlin.

Yields on Greek bonds fell and the euro rose, with UniCredit economist Andreas Rees saying Merkel and Sarkozy had "made a first step towards compromise and to salvaging (Europe's) capacity to act."

"We are well aware of these worries, which is why we are calling for a solution as soon as possible," Merkel, the head of Europe's top economy and the biggest contributor to the eurozone's three bailouts so far, told reporters.

Merkel said she now backed a new package for Athens along the lines of a deal on Romanian debt agreed in Vienna in 2009, whereby private banks agreed to buy new government bonds to replace ones that matured.

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"The Vienna Initiative, as it is known, is a good foundation and I believe we can achieve something on this basis," Merkel said.

This "rollover" option is favoured by the ECB and France, since it avoids the risk of rating agencies declaring Athens in default, something which could send shock waves through the European and global financial systems.

AFP/The Local/mry

The Local (news@thelocal.de)

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Your comments about this article

14:14 June 17, 2011 by William Thirteen
'involvement of the private sector on a voluntary basis.'

exactly which private sector investors are going to volunteer to take a haircut? and how would their shareholders feel about it? Which is not to say that I support forced extensions on the notes that are coming due. Trichet has already indicated that a selective default is unacceptable to the ECB. I'll be interested to which of the available options - all of which seem dreadful - will end up being chosen.
14:27 June 17, 2011 by freechoice
Mein Gott! I am broke! Who is bailing me out? LOL!
14:32 June 17, 2011 by lunchbreak
Of course! Today no one is accountable anymore, especially the Greeks it seems. We owe them.
14:33 June 17, 2011 by finanzdoktor
Interesting picture. Don't know if Chancellor Merkel is more upset that someone dared to ask a question (or question her decision), or if she is thinking "Great, what is he saying now????!!!!!"
14:54 June 17, 2011 by elboertjie
Greece, just default already!

Can't keep propping up inflated castles in the sky; just bring it down to the ground and build it up again. Default gives the Greek people a better chance to get out of debt and Germans a better chance not to get poorer.
15:18 June 17, 2011 by TheCrownPrince
May I - as a german tax payer - suggest that I contribute on "a voluntary basis", too?

Again Merkel came, saw and lost. In parliament the said recently that the private investors must be involved. And now? Always giving in to the French, it's disgusting.

What, there is a No-Bail-Out-clause in the treaties? Who cares?

Isn't Merkel there to protect german interests? Where does stupidity end and high treason begin?
16:26 June 17, 2011 by Bill Simpson
Finding people to voluntarily agree to lose money might be a bit rough. If you run into any such people, ask them to send me a check over here in hot, humid Slidell, Louisiana. After removing all the mildew from my driveways and rear patio, I noticed that the cedar fencing in my rear yard will need to be replaced in a few years, and I don't want to pay for it myself. Kind of like the Greeks and others don't want to pay most of their taxes.
17:05 June 17, 2011 by William Thirteen
do keep in mind that the bailout funds are not only going to the Greeks but to the large investors that bought Greek bonds - Commerzbank being the one of banks with the largest exposure.

17:35 June 17, 2011 by Englishted
Euro made your Euro bed now lie in it.
18:19 June 17, 2011 by Bushdiver
They are just prolonging the inevitable. Greece will eventually default on their loan repaym,ents. It's just a matter of time. Loaning them more money so they can pay off their first installment on the previous loan is totally rediculas. I think eventually the Euro will collapse along with the EU. As far as I'm concerned, that can't happen fast enough. The smaller and poorer countries will never be able to keep up with the likes of Germany and France, and now there are a few more questionable countries from the east that will probably run in to a similar problem.
18:55 June 17, 2011 by MJMH
When will the leaders see the same writing on the wall that the public does. The European dream and its spawn Globalism have turned into nightmares. Dump the Euro now. Turn the EU back to the EEC and reinstate borders. Stop all immigration and focus on quality of life for each citizen as opposed to quantity of stuff. Forget about competing with the USA and China because both have flaws too. Europe's greatness was the nation-state. From the Ottoman Empire to Ming China there have always been large, centralized and strong threats yet the nations of Europe survive and thrive.
19:57 June 17, 2011 by Jack Kerouac
Well said, CrownPrince. Also, I don't agree with the intention of giving Greece more bailout money in order to pay "back" their current debt they owe from hte first bailout! It's like we're giving them free euros with no accountability, restrictions, or plausible terms for repayment. Outrageous.
20:23 June 17, 2011 by JohnnesKönig
Let em eat cake! In the real world, when we make mistakes, we suffer the consequences... The Greek made their choices, now pay the piper!
20:29 June 17, 2011 by hOU
I bet the UK, Sweden, Switzerland, Poland et al must be thanking their lucky stars ...

Time for Greece to slash military spending right now, like it'd be enough ... ha!
21:40 June 17, 2011 by deutschamer
Let Greece default. They will then no longer be able to borrow and so will have to live within their means.

Its the banks that want the bailouts. Why should tax payers bail them out.

The financiers put out the propaganda that if Greece defaults, there will be a European economic catastrophe. Even if that's true, let it happen. People only learn through pain. If the financial system crashes because of a sovereign debt default from a country as economically small as Greece, then that is a sorry system. So let the banks fail. Something better will grow up in its place. Europe and the US are bankocracies. Time to stick it to the banksters.

It should be the German citizens rioting in the streets.

I used to like Merkel, but in the final analysis, she is just another politician.
22:04 June 17, 2011 by jmclewis
Angie clearly the solution is to give Greece more money, if you do not your friends a Commerce & DB will loose on the loans they gave Greece!
22:59 June 17, 2011 by 9900lawre
Typical French surrender monkeys agreeing to this!

Greece ballsed up twice in a row, 3 strikes and your out! Just like any game. Except our money in the hands of others is not a game.
23:26 June 17, 2011 by melbournite
Its not that the Euro dream is a failure its that its so far undemocratic - its a playground for the rich. Banks lend criminally, their government buddies bail them out with our money and then they say that we have to pay again by having our pensions, schools and hospitals cut. It wont end with attacks on Greek workers.. it will end up as attacks on German and French workers as well. Time for a real democratic europe in the city squares, just like in Syntagma and further afield in Tahrir
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