January 27, 2012
Fresh signs of tension between France and Germany over the eurozone rescue emerged on Friday, as expectations rise that a deal to restructure Greece’s sovereign debt could be agreed as early as this weekend.
“We are very close to a deal, if not today then over the weekend and preferably in January, not February. We are very close,” Olli Rehn, European commissioner responsible for economic and monetary affairs, told the World Economic Forum in Davos on Friday.
As Lucas Papademos, the Greek prime minister, resumed talks with Charles Dallara, head of the Institute of International Finance, there was disagreement in Davos over the size of European stability mechanisms and Germany’s insistence on tough austerity measures.
German finance minister Wolfgang Schäuble said the size of the European Stability Mechanism, which will replace the European Financial Stability Fund and be used to bail-out struggling eurozone countries, was less important than introducing economic reforms. “It can be any size. It will not work if the fundamental problems have not been addressed.
“Greece has not only to commit itself, Greece has to deliver. Because Greece has committed itself two years ago and not all of the commitments have been delivered. We must not give them the wrong incentives.”
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