News / Economy

Merkel Downplays Rumors of Second Greek Debt Writeoff

German Chancellor and top candidate of the Christian Democratic Union Angela Merkel makes a speech in the northern German town of Sankt Peter-Ording, July 19, 2013.
German Chancellor and top candidate of the Christian Democratic Union Angela Merkel makes a speech in the northern German town of Sankt Peter-Ording, July 19, 2013.
Selah Hennessy
German Chancellor Angela Merkel has played down speculation that Greece could get a second debt writedown, saying that could destabilize the eurozone.  But some analysts say a debt writedown might be exactly what's needed to keep the euro zone on track to recovery. 

Merkel held the chancellor's annual summer news conference Friday, giving her an important opportunity to address the media just months before Germans vote in the September federal election.

Europe's ongoing debt crisis is a major campaign issue and Greece was one of the main topics.
 
Speaking to reporters, she repeated her view that she does not see a debt "haircut" for Greece.

On Thursday the German finance minister was in the Greek capital Athens and came bearing the same message.

On Friday Merkel said the repercussions of a writedown would be bad for the eurozone as a whole.
 
She said if a so-called "haircut" were to take place, another country might also request a debt write-down.

Such a move, she said, would lead to uncertainty for all investors in the euro area and call into question everything that has been done in recent years to stabilize the euro zone.

Iain Begg from the European Institute at the London School of Economics said the Greek situation should be assessed in isolation.

"Greece always has to be regarded as a special debt because it is much more extreme," Begg explained. "It has a huge public debt and that debt is owed to foreigners."

Portugal, Ireland and Cyprus have also received bailouts, but their loans are dwarfed in comparison to the $400 billion Greece has borrowed.

Nonetheless, Greek finances remain dire and the countries' economy keeps shrinking.  About one-quarter of the population is out of work.
 
As German federal elections loom, Mrs. Merkel may now be playing down the possibility of a debt write-down, but Begg said he thinks that perspective will have to shift.

European officials realize, he said, that Greece needs a new lifeline if its economy is to recover.

"You want to sort out the problems in the public sector but you aggravate them by squeezing too hard," Begg added. "And I think the European partners recognize this, which is why I think in the coming months you will see some moves to alleviate the pressure of public debt on the Greek economy."

Recent polls have shown that Merkel is likely to win the vote in Germany, which will be held on September 22.

You May Like

Turkey's Controversial Reform Bill Giving Investors Jitters

Homeland security reform bill will give police new powers in search, seizure, detention and arrests, while restricting the rights of suspects, their attorneys More

Audio Slideshow In Kenyan Prison, Good Grades Are Path to Freedom

Some inmates who get high marks could see their sentences commuted to non-custodial status More

Ali Regained Title in Historic Fight 40 Years Ago

'The Champ' knocked Foreman out to regain crown he had lost 7 years earlier when US government accused him of draft-dodging and boxing officials revoked his license More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Victorious Secularists Face Challenge to Form Government in Tunisiai
X
Henry Ridgwell
October 30, 2014 11:39 PM
Official results from Tunisia show the Islamist Ennahda party has failed to win the second free election since the so-called "Arab Spring" uprising in 2011. Ennahda, which handed power to a government of technocrats pending the elections, lost out to the secular party Nidaa Tounes. Henry Ridgwell reports from London that the relatively peaceful poll offers some hope in a volatile region.
Video

Video Victorious Secularists Face Challenge to Form Government in Tunisia

Official results from Tunisia show the Islamist Ennahda party has failed to win the second free election since the so-called "Arab Spring" uprising in 2011. Ennahda, which handed power to a government of technocrats pending the elections, lost out to the secular party Nidaa Tounes. Henry Ridgwell reports from London that the relatively peaceful poll offers some hope in a volatile region.
Video

Video Africa Tells its Story Through Fashion

In Africa, Fashion Week is a riot of colors, shapes, patterns and fabrics - against the backdrop of its ongoing struggle between nature and its fast-growing urban edge. How do these ideas translate into needle and thread? VOA’s Anita Powell visited this year’s Mercedes Benz Fashion Week Africa in Johannesburg to find out.
Video

Video Smugglers Offer Cheap Passage From Turkey to Syria

Smugglers in Turkey offer a relatively cheap passage across the border into Syria. Ankara has stepped up efforts to stem the flow of foreign fighters who want to join Islamic State militants fighting for control of the Syrian border city of Kobani. But porous borders and border guards who can be bribed make illegal border crossings quite easy. Zlatica Hoke has more.
Video

Video China Political Meeting Seeks to Improve Rule of Law

China’s communist leaders will host a top level political meeting this week, called the Fourth Plenum, and for the first time in the party’s history, rule of law will be a key item on the agenda. Analysts and Chinese media reports say the meetings could see the approval of long-awaited measures aimed at giving courts more independence and include steps to enhance an already aggressive and high-reaching anti-corruption drive. VOA’s Bill Ide has more from Beijing.
Video

Video After Decades of Pressure, Luxembourg Drops Bank Secrecy Rules

European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video Kobani Refugees Welcome, Turkey Criticizes, US Airdrop

Residents of Kobani in northern Syria have welcomed the airdrop of weapons, ammunition and medicine to Kurdish militia who are resisting the seizure of their city by Islamic State militants. The Turkish government, however, has criticized the operation. VOA’s Scott Bobb reports from southeastern Turkey, across the border from Kobani.

All About America

AppleAndroid

World Currencies

EUR
USD
0.7893
JPY
USD
107.68
GBP
USD
0.6238
CAD
USD
1.1214
INR
USD
61.185

Rates may not be current.