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Merkel mulls easing Greece rescue terms

Germany's Chancellor Angela Merkel listens to a presentation by Douglas Wallace, scientist at Dalhousie University (R), and Professor Louis Fortier of Universite Laval (C) during a tour at Dalhousie University in Halifax, Nova Scotia, August 16, 2012. (REUTERS/Sandor Fizli)

Chancellor Angela Merkel is considering easing Greece’s bailout terms, fanning tensions with members of her coalition who oppose giving the Greek government any more concessions, two German lawmakers said.

Merkel’s government is torn between showing some leniency toward Greece as it struggles to meet the terms of its rescues and insisting that Prime Minister Antonis Samaras delivers on his promises, Klaus-Peter Willsch and Frank Schaeffler, both of whom have voted against Merkel’s euro crisis policies in parliament, said in separate telephone interviews.

“The sensitivities among many more than just the 27 coalition members who voted ‘no’ last time are well known” to Merkel, “so the official line is to stay tough” on Greece, said Willsch, a member of Merkel’s Christian Democratic Union party. “But at the same time, some are being sent forward to test the waters on how this tough line can be abandoned.”

Samaras, whose coalition favors extending its fiscal adjustment program by two years to the end of 2016, will visit Berlin on Aug. 24 for talks with Merkel almost three years after the debt crisis emerged in Greece. The country’s international creditors are due to report on Greek progress in meeting bailout targets next month, an assessment that will determine whether Greece receives a next aid payment needed to stay in the euro.

While it’s too early to rule out that an example will be made of Greece if it fails to adhere to the program terms, Merkel will probably seek a compromise with Samaras that would allow both sides to save face, Schaeffler, a Free Democratic Party lawmaker said in a telephone interview. The example offered by Spain shows that bailout terms are flexible, he said.

“We’re seeing the softening already in the case of Spain, which was given a ‘bailout deluxe’ rather than a fully-fledged program,” Schaeffler said Thursday. “And since Spain will need more money, that program will also be softer than that of the others,” possibly triggering renegotiation demands in Ireland and Portugal.

 
A version of this article appeared in the print edition of The Daily Star on August 18, 2012, on page 5.

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