Rival accuses Germany's Merkel of deceit over euro zone bailouts

BERLIN Sat Jul 20, 2013 11:52am EDT

German Chancellor Angela Merkel gestures during a news conference at Bundespressekonferenz in Berlin July 19, 2013. REUTERS/Tobias Schwarz

German Chancellor Angela Merkel gestures during a news conference at Bundespressekonferenz in Berlin July 19, 2013.

Credit: Reuters/Tobias Schwarz

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BERLIN (Reuters) - Germany's main opposition leader Peer Steinbrueck accused Chancellor Angela Merkel of covering up the likelihood that German taxpayers will have to fund further euro zone bailouts due to a looming election.

Steinbrueck, who is lagging Merkel in the run-up to the September 22 vote, was quoted by a German magazine on Saturday as saying a fresh writedown on Greek debt would mean losses for public creditors, in other words taxpayers.

"As such, the illusion about not being a union of joint liability would burst like a bubble - possibly even before the federal elections," Steinbrueck told Wirtschaftswoche.

He added it could "not be excluded in any way" that other countries might need further financial help after the election.

Many debt experts believe Europe will have to write off some bailout loans to Greece if the country is to make a successful return to capital markets.

The International Monetary Fund said last month Athens may require additional debt relief as early as next year, although it did not specify what the relief might look like.

Merkel and her government have in recent weeks repeatedly ruled out a further writedown of Greek debt.

An open debate about loan losses could damage Merkel in the run-up to the vote. She is tipped to win a third term, in part because voters believe she has shielded them from such losses during a debt crisis that first erupted in Greece in late 2009.

Private owners of Greek debt were forced to swallow significant losses on their holdings last year, but European governments and the European Central Bank, which bought up Greek bonds at the height of the crisis, have refused to take a hit.

Germany has insisted a writedown of Greek debt held by euro zone governments would be illegal, although Finance Minister Wolfgang Schaeuble suggested late last year that such losses might be considered once Greece achieves a primary surplus.

(Reporting by Sarah Marsh; Editing by Mark Potter)

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Comments (2)
Jake987 wrote:
And the real decision ultimately rests with Greece…..they could join Detroit in bankruptcy, leave the Euro or just refuse to pay ……

Argentina stands by refusal to pay holdout creditors: hearing

Jul 20, 2013 2:18pm EDT  --  Report as abuse
Jeff_Hook wrote:
1. I realize it’s summertime, and maybe standards are relaxed, but, Mark Potter is identified as the editor of this copy. Couldn’t he have edited this text more carefully? Couldn’t the opening sentence have been been stated more clearly?! I assume the purpose was to say Steinbrück accused Merkel “of covering up *UNTIL the looming election* the likelihood that German taxpayers will have to fund further euro zone bailouts,” NOT that “German taxpayers will have to fund further euro zone bailouts *DUE TO a looming election*”… The funding of the future bailouts doesn’t result from the “looming election”! It’s not necessitated by the “looming election”! He’s accusing Merkel of concealing the need to fund the bailouts, and he’s saying that her motive for the concealment is to hide this information from German voters until after the election. Aren’t print journalists professional writers and shouldn’t they strive for clarity? Aren’t editors expected to compensate for inevitable “goofs”?

2. The claim that Merkel and the CPD are “suppressing” any discussion of an OSI (an “Official Sector Initiative” such as was urged late last year by the IMF, i.e. “debt forgiveness,” an official “haircut,” etc.) until after the 9-22-13 Chancellor election seems to be the current consensus. It’s repeated in most news reports and in most news analyses, but it makes little sense to me. If Merkel campaigned against such an accommodation, if she were re-elected, and if she then reversed her position, I’d expect German voters to be so outraged by what would look like a cynical concealment, and by what would look like a campaign “on false pretenses” that Merkel might be removed from office in a recall election. I’d like to see Reuters discuss this argument rather than simply repeat the standard interpretation.

3 What about the extremely interesting possibility of a so-called “Grand Coalition” government in Germany, in which the CPD would function as the primary partner, but with the SPD?! How would that affect Germany’s stance with respect to Greece’s sovereign debt crisis?

Jul 20, 2013 7:39pm EDT  --  Report as abuse
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