Germany will back Greek aid but wary of hints at haircut

Tue Nov 27, 2012 6:49am EST
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By Stephen Brown

BERLIN (Reuters) - German lawmakers are likely to approve the release of Greek aid immediately despite suspicions that talks of a debt write-down have just been delayed until after Germany's 2013 elections.

Chancellor Angela Merkel's center-right coalition and the opposition Social Democrats (SPD) said on Tuesday that the Greek deal agreed overnight would be put to the vote in the Bundestag lower house on Thursday or Friday.

With both sides voicing support, approval is guaranteed but the question will be whether the chancellor can rely on her coalition or needs the votes of the SPD and Greens.

They want to help Greece but will exploit any chance to embarrass Merkel ahead of September 2013's elections, when she will seek a third term in office.

SPD parliamentary leader Frank-Walter Steinmeier said his party would not do anything "that could lead to Greece becoming unable to make its payments in the short term or could force it to leave the euro zone".

But he accused German Finance Minister Wolfgang Schaeuble of pulling the wool over the eyes of the public, which might accept granting already-agreed aid tranches but would not easily support a second write-down of Greek public debt.

"Mr. Schaeuble brags to his own bloc that a debt haircut has been avoided but I tell you it has just been postponed to after the Bundestag elections," he told German TV, adding that euro zone ministers had made "cryptic hints" to this effect.

Greece's international lenders finally reached a deal on a package of measures to reduce Greek debt by 40 billion euros, cutting it to 124 percent of gross domestic product by 2020.   Continued...

Germany's Finance Minister Wolfgang Schaeuble arrives at a euro zone finance ministers meeting in Brussels November 26, 2012. REUTERS/Francois Lenoir