German government at odds with itself over Greek debt relief

BERLIN (Reuters) - Germany’s coalition government split along party lines on Monday over the question of debt relief for Greece ahead of a crunch meeting in Brussels to tackle the thorny issue.

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Euro zone finance ministers and the International Monetary Fund are meeting to seek a deal on Greek debt relief that balances the IMF’s demand for a clear “when and how” with Berlin’s preference for “only if necessary” and “details later”.

Foreign Minister Sigmar Gabriel, a Social Democrat, caused the divergence in views by demanding that the euro zone make a firm commitment on granting debt relief to Greece, effectively criticising conservative Finance Minister Wolfgang Schaeuble’s tough stance.

“Greece has been promised debt relief over and over again if reforms are carried out,” Gabriel told the Sueddeutsche Zeitung paper. “Now we must stand by this promise.”

“This must not fail due to German resistance,” said Gabriel.

Without the deal no new loans can be granted to Athens, even though the bailout is now handled only by euro zone governments and Greece needs new credit to repay some 7.3 billion euros worth of maturing loans in July.

Schaeuble later described reforms agreed by Greece as “remarkable” but said the Greek economy was not yet competitive and that Athens must press ahead with implementing its existing reforms-for-aid program.

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“We are not talking about a new program but the implementation of the program agreed in 2015,” Schaeuble said. “At the end of the program, in 2018, we will, if necessary, put in place additional measures that we have defined.”

“It is about one goal - namely to help Greece become competitive,” Schaeuble said, adding Greece was not there yet.

Speaking at a regular government news conference, Foreign Ministry spokesman Martin Schaefer said institutions such as the IMF and the European Commission were not far apart in their assessment on Greece.

“Germany should have an interest in not isolating itself too much,” Schaefer said.

A spokeswoman for Schaeuble’s conservative-led finance ministry said that everybody wanted a solution “in the interest of Greece”, adding it was up to euro zone finance ministers to find a solution during their talks in Brussels.

Reporting by Noah Barkin; Writing by Paul Carrel; Editing by Greg Mahlich