Financial Times
June 19, 2011
Angela Merkel, the German chancellor, is facing a backlash from her own supporters in parliament, as well as opposition members, over her willingness to compromise on the participation of private bondholders in a new financial rescue package for Greece.
In talks on Friday with Nicolas Sarkozy, French president, Ms Merkel agreed that a purely voluntary rollover of bonds would be enough to meet her government’s insistence on private creditors contributing to debt relief for Greece.
Her move marked a big step back from Germany’s earlier demand for a full bond exchange by private creditors with extended maturities, a deal that would have meant a more substantial private sector contribution.
“What has been agreed is not a real participation of [private] creditors,” said Frank Schäffler, a rebel leader in the Bundestag from the ranks of the Free Democratic party, the liberal junior partner in Ms Merkel’s coalition. “It does not correspond to what the German Bundestag has agreed,” he told the Frankfurter Allgemeine newspaper on Sunday.
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