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Plea for help

June 18, 2011

Amid continued protests in Athens, German Chancellor Merkel has called on private creditors to provide "substantial aid" to ease the Greek debt crisis. Meanwhile, the Eurogroup has warned of the euro crisis spreading.

Chancellor Angela Merkel speaking at a CDU conference in Berlin
Merkel faces a domestic backlash over Germany's contribution to EU bailoutsImage: picture-alliance/dpa

As protests raged in Athens on Saturday, German Chancellor Angela Merkel issued a call for private creditors to offer "substantial" aid to debt-ridden Greece.

"We must be sure to try to have a substantial contribution" from private creditors like banks and insurance companies for debt-laden Greece, Merkel told her Christian Democratic Union (CDU) party at a conference in Berlin.

Merkel conceded, however, that private contribution would have to be voluntary.

"At the moment we can only get the participation of the private investors on a voluntary basis," she said.

Greece is awaiting approval for the next part of an EU- and IMF-brokered deal worth 110 billion euros.

Speaking to German daily newspaper, Boerrsenzeitung, on Saturday, German Finance Minister Wolfgang Schaeuble reasserted Merkel's request, adding that the private sector's role should be "quantifiable" and "guaranteed."

During talks between Merkel and French President Nicolas Sarkozy in Berlin on Friday, Merkel backed away from her previous calls for private investors to contribute up to a third of the second Greek rescue package by accepting later repayment on their Greek bonds.

Euro-Gruppen-Präsident Jean-Claude Juncker
The Eurogroup chief warns of an EU debt crisis domino-effectImage: picture-alliance/dpa

The leaders instead established the voluntary nature of private sector involvement in a second bailout and concluded that it be conducted in coordination with the European Central Bank, the European Commission and the International Monetary Fund.

'Playing with fire'

Merkel's comments come as Eurogroup chief, Jean-Claude Juncker warned that ramifications of the Greek debt crisis could spread like wildfire through other EU countries.

Juncker asserted that the problems which forced Greece, Ireland and Portugal to seek emergency aid could not only effect Spain, which is tipped as the next casualty, but also Italy and Belgium.

The chairman of the eurozone finance ministers' Eurogroup criticized German pressure to involve bondholders, saying it had pushed up the cost of the Greek bailout.

In an interview with the German daily Suddeutsche Zeitung, the Luxembourg prime minister and Eurogroup head warned that "we are playing with fire."

The EU and International Monetary Fund are currently trying to assemble a second bailout package for Greece in return for strict austerity measures.

Meanwhile, thousands of protesters marched on the Greek parliament in a show of unabated public anger at the government's determination to introduce further austerity measures.

Greek Prime Minister George Papandreou announced a new government line-up on Friday to deal with the crisis.

Author: Charlotte Chelsom-Pill (AFP, Reuters)

Editor: Sonia Phalnikar