Row over Greek: Aid Merkel's Hard Line Annoys European Partners

Spiegel
June 16, 2011

Berlin's insistence on involving private creditors in a new Greek bailout has made Germany unpopular with some of its European partners, including the ECB. Hopes are high that Friday's summit between Chancellor Angela Merkel and French President Nicolas Sarkozy will lead to a breakthrough. But if she backs down, Merkel risks losing domestic support.

The welcome will once again appear very cordial. It won't be as grandiose as it was three weeks ago at the G-8 summit in the seaside resort of Deauville in Normandy, France, with its red carpets and enthusiastic crowds. But Nicolas Sarkozy and Angela Merkel will also work the cameras this time around when the French president visits the Chancellery in Berlin: A kiss on the left cheek, a peck on the right one, smiles and waving.

Behind closed doors, the atmosphere will be less amicable. Instead, tough talks will take place over the future of Greece and the euro.

European diplomats have high hopes for the German-French summit on Friday morning. Merkel and Sarkozy are expected to pave the path towards a breakthrough in the debate over the next aid package for Greece, which could run as high as €120 billion. On Sunday, the euro-zone finance ministers are expected to meet in Luxembourg prior to a meeting of European Union leaders at the end of the week. By then everything should, or rather must, be finalized. Time is running out, too: Without a fresh infusion of funds by July, Greece will run out of money. Without an EU aid package, it will face insolvency.

The fronts, however, have hardened -- especially between Germany and France. On Tuesday, German Finance Minister Wolfgang Schäuble spent three hours in Brussels in "very intensive" discussions, a spokesman for the German Finance Ministry said on Wednesday -- and that was putting things diplomatically. One European Union diplomat told the German news agency DPA that there had been bitter quarrelling during the talks. At the end of the meeting, the ministers weren't even able to come up with a common statement of solidarity they had hoped to issue in order to quiet nervous markets.

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