German Chancellor Merkel Rules Out Debt Haircut for Greece



Angela Merkel discusses Russia at German parliament buildingGerman Chancellor Angela Merkel once again rejected the possibility of a classic haircut for the Greek debt.

In an interview with the German broadcaster ARD, Merkel dismissed one of the Greek government’s main priorities.

“A classic haircut, or adoption of 30%-40% of the debt, is something the union cannot give,” she said and added that it could happen outside of the union.

However, the German Chancellor also said that there could be discussions over lower interest rates as well as longer maturity dates on Greece’s payments, but only after the first review of the bailout program, which will soon be negotiated.

Merkel also dismissed both rumours of her disagreeing with German Finance Minister Wolfgang Shcaeuble on how to deal with the Greek crisis and rumours of a rift between Schaeuble and Vice Chancellor Sigmar Gabriel over the same matter.

“We will now work together, both within the coalition and the party,” she said.


3 COMMENTS

  1. Mathematics doesn’t care about politicians pandering to populists. If Greece can’t balance its budget now it certainly won’t be able to balance it with another 100B Euro. Whether one calls it haircut and default., debt relief is coming. Politicians that claim otherwise are liars as surely as Tspiras who claimed he would roll back cuts.

  2. Following WW2 Germany’s creditors amongst them Greece, agreed to a classical 50% haircut on German debt, despite German troops having occupied some of these creditor nations only a few years beforehand. In 2015 Germany’s leader Merkel says, “No classical debt haircut for Greece.” Quite a contrast in attitudes.

    50% of Germany’s postwar EXTERNAL DEBT CANCELLED at the 1953 “London Agreement on External German Debts” by creditors, amongst those creditors was Greece.  An important term of the agreement was that repayments on the remainder were stretched out over 30 years, and were ONLY DUE while West Germany ran a trade surplus, and that repayments were limited to 3% of export earnings.
    This debt forgiveness took place after German troops had occupied and laid waste to many of these European creditor nations, including ofcourse Greece.
    https://greece.greekreporter.com/2015/07/09/germany-can-write-off-greek-debt-like-greece-did-for-germany-in-1953/

  3. Adults don’ attempt to lump in every Greek into the same pot. Debt relief isn’t an option. If it was Greek state wouldn’t be asking for it.