Bundesbank warns against altering Greek bailout terms | Business| Economy and finance news from a German perspective | DW | 15.06.2012
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Bundesbank warns against altering Greek bailout terms

The head of Germany's central bank has categorically ruled out a softening of Greek bailout terms against the backdrop of aspirations in Athens to strike a laxer deal. His warning comes ahead of decisive elections.

German Bundesbank chief Jens Weidmann on Friday warned against changing Greece's bailout terms. He told the Spanish El Pais newspaper that whatever the outcome of elections in Greece this weekend, the conditions for the bailout must not be softened in any way, even if that eventually meant the country's exit from the eurozone.

Weidmann noted that Greece had already received more support in the debt crisis than any other euro area member country in trouble. "Greece got more help than the rest of the eurozone, and relaxing this already softened framework cannot be an option," the central bank boss argued.

Weidmann elaborated that allowing Greece to reopen negotiations on the bailout terms could put enormous pressure on political leaders in other bailed-out nations such as Portugal to do the same and haggle over less rigid deals.

Make-or-break elections

"I think that would be a very dangerous strategy and would harm those countries which are implementing reforms and austerity measures very quietly," he said.

Failure to respect the current terms for more international assistance could entail very drastic consequences, the Bundesbank chief warned. He made it clear that refusal to abide by existing agreements had the potential to lead to Greece's exit from the eurozone.

Weidmann told the Greek daily Kathimerini that no nation must be allowed to try and blackmail partner nations in the 17-member single currency bloc.

Greece is electing a new parliament at the weekend. If the opponents of agreed cost-saving and austerity measures take the upper hand, the end of Greece's stay in the eurozone is widely believed to be just around the corner.

hg/tj (Reuters, AFP)