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

N. Korea Sentences American to 6 Years Hard Labor

Matthew Miller's brief trial Sunday comes two weeks after 24-year old Miller and two other American detainees appealed to the US government to help free them More

Pakistan Rejects Afghan Criticism of 480-kilometer Border Trench

Military spokesman tells VOA the project is part of administrative and security measures taken to secure the mountainous border with Afghanistan More

Photogallery Typhoon Kalmaegi Makes Landfall in Philippines

Storm makes landfall late Sunday, cutting power and communications lines and forcing people to flee to higher ground 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.
Scotland Independence Bid Stokes Global Interesti
X
Henry Ridgwell
September 12, 2014 8:35 PM
The people of Scotland are preparing to vote on whether to become independent and break away from the rest of Britain, in a referendum being watched carefully in many other countries. Some see it as a risky experiment; while others hope a successful vote for independence might energize their own separatist demands. Foreign immigrants to Scotland have a front row seat for the vote. VOA’s Henry Ridgwell spoke to some of them in Edinburgh.
Video

Video Scotland Independence Bid Stokes Global Interest

The people of Scotland are preparing to vote on whether to become independent and break away from the rest of Britain, in a referendum being watched carefully in many other countries. Some see it as a risky experiment; while others hope a successful vote for independence might energize their own separatist demands. Foreign immigrants to Scotland have a front row seat for the vote. VOA’s Henry Ridgwell spoke to some of them in Edinburgh.
Video

Video Washington DC Mural Artists Help Beautify City

Like many cities, Washington has a graffiti problem. Buildings and homes, especially in low-income neighborhoods, are often targets of illegal artwork. But as we hear from VOA’s Julie Taboh, officials in the nation's capital have come up with an innovative program that uses the talents of local artists to beautify the city.
Video

Video Palestinians Turn to Rebuilding Gaza

After almost two months of conflict in Gaza, Palestinians are preparing to rebuild the isolated Mediterranean enclave with assistance from abroad. Meanwhile, an international human rights group has found that Israel likely violated international laws of war during some of its attacks on Gaza. Zlatica Hoke has more.
Video

Video US Muslim Leaders Condemn Islamic State

Leaders of America's Muslim community are condemning the violent extremism of the Islamic State group in Iraq and Syria. The U.S. Muslim leaders say militants are exploiting their faith in a failed effort to justify violent extremism. VOA correspondent Meredith Buel reports.
Video

Video Middle Eastern Church Leaders Highlight Christians’ Plight

Patriarchs of Eastern Rite churches came to Washington this week to draw attention to the attacks against Christians in Syria, Iraq and elsewhere in the Middle East. VOA’s religion correspondent Jerome Socolovsky has more.
Video

Video Americans' Reaction Mixed on Obama Strategy for Islamic State Militants

President Barack Obama’s televised speech on how the United States plans to “degrade and destroy” the group known as the Islamic State reached a prime-time audience of millions. And it came as Americans appear more willing to embrace a bolder, tougher approach to foreign policy. VOA producer Katherine Gypson and reporter Jeff Seldin have this report from Washington.
Video

Video Authorities Allege LA Fashion Industry-Cartel Ties

U.S. officials say they have broken up crime rings that funneled tens of millions of dollars from Mexican drug cartels through fashion businesses in Los Angeles. Mike O'Sullivan reports that authorities announced nine arrests, as 1,000 law enforcement agents fanned out through the city on Wednesday.
Video

Video Bedouin Woman Runs Successful Business in Palestinian City

A Bedouin woman is breaking social taboos by running a successful vacation resort in the Palestinian town of Jericho. Bedouins are a sub-group of Arabs known for their semi-nomadic lifestyle. Zlatica Hoke says the resort in the West Bank's Jordan Valley is a model of success for women in the region.


Carnage and mayhem are part of daily life in northern Nigeria, the result of a terror campaign by the Islamist group Boko Haram. Fears are growing that Nigeria’s government may not know how to counter it, and may be making things worse. More

AppleAndroid

World Currencies

EUR
USD
0.7735
JPY
USD
107.03
GBP
USD
0.6155
CAD
USD
1.1011
INR
USD
60.954

Rates may not be current.