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Germany's Merkel reassures voters, warns against write-down of Greek debt

German Chancellor Angela Merkel has warned against a write-down of Greece’s debt but left open the option of more aid for Athens. Her comments come less than a month before elections.

In an interview with Focus magazine released Sunday, Chancellor Merkel warned a Greek debt write-down could spark insecurity in the eurozone.

“It could trigger a domino effect of uncertainty with the result that the readiness of private investors to invest in the eurozone again fall to nothing,” she said. A write-down would mean that investors who have loaned money would lose part of the eventual repayment of the amount owed.

She said Greece's debt would be reviewed again in 2014, as planned. “Until then the country still has much to do and must continue consistently to implement its reforms,” she said.

Her comments come less than a month before national elections and days after Finance Minister Wolfgang Schäuble brought the issue of debt-mired Greece onto the campaign trail. Schaüble, Merkel's fellow Christian Democrat (CDU) party member, provoked anger last week when he told a campaign rally that a new rescue for Athens was inevitable.

Opposition sounds off

The opposition seized on the opportunity to accuse Merkel of not being transparent enough on the possibility that German voters may, at some point, have to pump more money into the eurozone.

Merkel's Social Democrat (SPD) rival Peer Steinbrück said he would challenge her on the issue in coming weeks, including in a televised debate scheduled for next week.

"(The government) has handed out sleeping tablets and tried to hush up the fact that the stabilization of the eurozone will have a cost," Steinbrück told the Südwest Presse newspaper.

Meanwhile, Greek Finance Minister Yannis Stournaras said Athens may need a further 10 billion euros in extra support. He told the Greek newspaper Proto Thema that any future bailout would happen without any new terms since Greece's austerity measures are already set till 2016.

Analysts have long predicted that Athens will need more aid. The country has received two international bailouts in exchange for reforms including major public sector cuts.

hc/tj (Reuters, AFP, dpa)