Germany wants private creditors to share burden of new Greek bailout

Guardian
June 8, 2011

Germany has warned that private creditors will need to roll over the Greek debt if Berlin is to agree a new bailout running to tens of billions of euros in the next fortnight.

The ultimatum from Wolfgang Schäuble, the German finance minister, put Berlin on a collision course with Paris, Frankfurt and Brussels, where the French government, the European Central Bank, and the European commission oppose a restructuring of Greek debt.

In a letter to the ECB, the commission, and the other 16 finance ministers of the eurozone, Schäuble for the first time conceded the need for a new Greek bailout, in effect admitting that the €110bn (£98bn) rescue agreed last May had failed. He warned that the eurozone could be confronted with its first sovereign debt default within weeks if agreement was not reached on a new Greek rescue.

"Without another disbursement of funds before mid-July, we face the real risk of the first unorderly default within the eurozone," Schäuble wrote in the letter obtained by the Guardian. "Any additional financial support for Greece has to involve a fair burden-sharing between taxpayers and private investors."

More