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Germany rejects proposals of forgiving Greek debt

Canadian Press, The Canadian Press
2 Comments| January 30, 2015

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ATHENS, Greece _ Germany bluntly rejected suggestions that Greece should be forgiven repayment of its rescue loans, as a top eurozone finance official met on Friday the country's new left-wing government leaders in Athens.

The radical Syriza party won general elections over the weekend with pledges that included seeking forgiveness of more than half of Greece's the debt, and has already promised to renege on key budget reforms required in exchange for the a 240 billion euro ($270 billion) rescue package.

``The discussion about a debt cut or a debt conference is divorced from reality,'' Martin Jaeger, a German finance ministry spokesman, said in Berlin.

Jaeger said Greece was obliged to abide by the terms of the bailout program agreed by previous governments or endanger the bailout program. Without the rescue loans from its fellow eurozone countries and the International Monetary Fund, Greece would go bankrupt.

``If the measures announced by the new government in Athens were implemented, then one has to ask whether the basis of the program wouldn't be called into question and therefore pointless,'' he said.

Jeroen Dijsselbloem, the Dutchman who chairs eurozone finance meetings, met with Prime Minister Alexis Tsipras and his finance minister, Yanis Varoufakis.

Dijsselbloem was joined by Thomas Wieser, head of a group of eurozone officials that has dealt extensively with Greek bailout negotiations.

Tsipras' new government has already said it will not move ahead with several planned privatization projects or aim for budget surpluses required to pay down Greece's massive national debt.

Syriza has also promised to break off talks with bailout negotiators from the ``troika'' _ the European Commission, European Central Bank and International Monetary Fund _ and seek negotiations directly with eurozone government to try and cancel more than half the bailout debt.

European officials say they expect Greece to repay the money in full.

Credit ratings agency Fitch said Friday that, in the short term, both sides have a ``strong incentive'' to reach an agreement to make sure Greece gets the rescue money from the bailout programs. It warned, however, that drawn-out negotiations pose a ``high risk'' to the country's fragile economy.

``The content of any settlement is hard to predict,'' it said. ``There is a high risk that protracted and difficult negotiations will sap confidence and liquidity from the Greek economy.''

___

Jordans reported from Berlin. Nicholas Paphitis in Athens also contributed.



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