Merkel wants ''substantial'' bank aid for Greek debt

German Chancellor Angela Merkel Saturday urged "substantial" aid from private creditors in resolving Greece''s debt woes, as the Eurogroup warned the crisis could spread like a firestorm through other EU economies. "We must be sure to try to have a substantial contribution" from private creditors like banks and insurance companies for debt-laden Greece, Merkel told a meeting of her Christian Democrat Union party in Berlin.
However the German leader added that "at the moment we can only get the participation of the private investors on a voluntary basis." The "voluntary" nature of such involvement is key for many observers, who fear that forced input from the private sector would be seen as a debt default on the part of Greece, with ramifications far beyond.
German Finance Minister Wolfgang Schaeuble echoed Merkel but also stressed that the private sector''s role should be "quantifiable" and "guaranteed", in comments made to the daily Boerrsenzeitung. The EU and the International Monetary Fund are trying to assemble a second bailout package for Greece worth almost as much as last year''s 110 billion euros ($156 billion) loan deal.
However in return Athens must introduce strict austerity measures to rein in the burgeoning national debt, leaving the government to deal with widespread public protest. Greek Prime Minister George Papandreou announced a new government line-up on Friday, bringing in political veterans to ward off economic meltdown and seek to avoid the civil unrest growing.
As Greece''s new cabinet works to muster parliamentary support for the tough package demanded by the EU and IMF, finance ministers from the 17 euro nations will gather Sunday evening in Luxembourg for the first of a series of meetings this week, vital to the euro crisis.
As Greece faces imminent default, they will debate whether to release the next instalment of the bailout from 2010 - 12 billion euros Athens needs to pay the bills in July. With the IMF demanding assurances that Athens can finance itself over the next year before paying out, the terms of a second rescue package will also come under scrutiny.