BRUSSELS – The latest in a series of Franco-German meetings to deal with the eurozone crisis saw little in the way of concrete decisions, but Chancellor Angela Merkel took the opportunity to warn Greece there will be no more money unless progress is made on details of the country’s second aid package.
“We have to implement the conclusions from October. That means the voluntary restructuring of Greek debt must be pushed forward. And from our point of view, the second Greek programme – including debt restructuring – must be achieved quickly otherwise it will not be possible to pay out the next tranche for Greece,” she said following a working lunch in Berlin with President Nicolas Sarkozy on Monday (9 January).
“We want Greece to stay in the euro area. We have repeatedly said that the restructuring of Greece’s debt is an offer to improve Greek debt sustainability. However, Greece must really implement its troika obligations,” she said, referring to conditions laid down by the EU, the European Central Bank and the International Monetary Fund (IMF).
The EU and the IMF in 2010 agreed to lend Greece €110 billion. Last year they signed off a further loan of €109 billion.
Since then both sides have been locked in negotiations over whether Greece is fulfilling its side of the bargain and how to make the private sector voluntarily accept a 50 percent loss on the value of their Greek bonds.
Talks have been complicated by suggestions from various experts that the private sector deal should either be scrapped altogether or that the writedown should be more substantial for it to make a real difference to Greece’s debt.
Outlining a vague to-do list following the meeting, Merkel said France and Germany are working on plans to speed up contributions to the eurozone’s permanent bailout fund (the ESM) and promised to look into the best practices of member states when it comes to labour market policies.
They also expressed confidence that a new intergovermental treaty on tightening fiscal discipline in the eurozone would be ready quickly. There is a “good chance” that it can be signed by the end of January, Merkel said.
The chancellor supported President Sarkozy’s decision to forge ahead with plans for a French-only financial transactions tax, but did not say if Germany would come onboard, admitting there is no agreement within her own cetnre-right/liberal ruling coalition on the issue.
Finance ministers should come with a report on the issue by March at the latest, she noted.
Sarkozy acknowledged that Monday’s meeting was just a small step in the drawn-out eurozone crisis.
Asked if enough measures had been taken to ensure the eurozone would be safe in the event of a Greek default, he said that if they were feeling “calm” about the situation they would not feel the need to meet so often.
“The situation is very tense,” he said.
The Merkel-Sarkozy event marks the beginning of a series of meetings leading up to the EU summit on 30 January. Merkel will hold talks with IMF chief Christine Lagarde on Tuesday and see her Italian counterpart Mario Monti on Wednesday. The leaders of France, Germany and Italy will meet on 20 January while EU finance ministers will meet three days later.