Mon, Jun 20, 2011 - Page 10 News List

Merkel wants bank aid for Greek debt

‘SUBSTANTIAL’ HELP:To stop the Greek debt bubble from bursting and leaving an oily mark on the rest of the EU’s economies, Germany wants banks to help in another bailout


German Chancellor Angela Merkel on Saturday urged “substantial” aid from private creditors to resolve Greek debt woes, as the Eurogroup warned that the crisis could spread like a firestorm through EU economies.

“We must be sure to try to have a substantial contribution” from private creditors like banks and insurance companies for debt-laden Greece, Merkel told a meeting of her Christian Democrat Union party in Berlin.

However, the German leader added that “at the moment we can only get the participation of the private investors on a voluntary basis.”

The “voluntary” nature of such involvement is key for many observers, who fear that forced input from the private sector would be seen as a debt default on the part of Greece, with ramifications far beyond.

German Finance Minister Wolfgang Schaeuble echoed Merkel, but also stressed that the private sector’s role should be “quantifiable” and “guaranteed,” in comments made to the daily Boerrsenzeitung.

The EU and the IMF are trying to assemble a second bailout package for Greece worth almost as much as last year’s 110 billion euro (US$156 billion) loan deal.

However, in return Athens must introduce strict austerity measures to rein in the burgeoning national debt, leaving the government to deal with widespread public protest.

Greek Prime Minister George Papandreou announced a new government line-up on Friday, bringing in political veterans to ward off economic meltdown and seek to avoid the civil unrest growing.

In the latest mass demonstration, police said up to 3,000 protesters took to the streets of Athens on Saturday.

Supporters of the All Workers Militant Front marched toward the city’s main Syntagma square and the parliament, the site of a three-week-long protest of the group calling themselves “The Indignants.”

The Greek General Confederation of Labour also announced plans to strike during an upcoming parliamentary debate and vote on the country’s future budget plans.

As Greece’s new Cabinet works to muster parliamentary support for the tough package demanded by the EU and IMF, finance ministers from the 17 euro nations were to gather yesterday evening in Luxembourg for the first of a series of meetings this week, vital to the euro crisis.

As Greece faces imminent default, they will debate whether to release the next installment of the bailout from last year — 12 billion euros Athens needs to pay the bills next month.

With the IMF demanding assurances that Athens can finance itself over the next year before paying out, the terms of a second rescue package will also come under scrutiny.

The informal conclave, due to carry on today and expand to the full 27 EU finance chiefs, comes ahead of a key bloc summit on Thursday and Friday that is due to put the final stamp on an economic governance package.

Initially aimed at assuring markets that Europe would avert future debt crises through closer monitoring and streamlining of economic policies, the summit instead will be overshadowed by events in Greece.

In Luxembourg, ministers will look at how to involve banks and private lenders in the next Greek bailout in line with demands from countries such as Germany, Finland and The Netherlands, keen to reassure taxpayers unwilling to pay for excesses elsewhere.

“We are working on a new program to be finalized rapidly with additional financing,” EU President Herman Van Rompuy said in -Dublin last week.

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