Private sector aid for Greece "voluntary," Merkel says
Private-sector participation in a second bailout for Greece will be "voluntary," German Chancellor Angela Merkel said Friday in Berlin after talks with French President Nicolas Sarkozy, DPA reported.
France had previously objected to German demands that private lenders, such as banks and insurance companies, be forced to accept losses on their loans to Greece as part of the second bailout.
"We desire participation of the private creditors on a voluntary basis," Merkel said. Sarkozy said the plan for "private participation on a voluntary basis" would be drafted by experts over the next few weeks, and he gave no details of how this would work.
The European Central Bank (ECB) would join in the drafting, Merkel said.
The two spoke to the media mid-way through the brief visit, before ending the meeting with a working lunch to discuss the Middle East.
Their talks precede an EU summit next Thursday and Friday in Brussels.
Athens needs an estimated 80 to 120 billion euros (115-172 billion dollars) to avoid bankruptcy, after last year's 110-billion-euro bailout package and a stringent reform programme failed to convince the markets.
Berlin had wanted investors to exchange Greek loans against new bonds, with extended repayment deadlines, before their current holdings mature, effectively devaluing the loans.
France, on the other hand, says investors should simply be persuaded to reinvest profits from the sale of mature bonds into further Greek holdings. The French position is backed by the ECB.