Merkel rules out cancelling any of Greece's debt

PanARMENIAN.Net - German Chancellor Angela Merkel has ruled out cancelling any of Greece's debt, saying banks and creditors have already made substantial cuts, BBC News reports.

But Merkel told the Hamburger Abendblatt newspaper she still wanted Greece to stay in the eurozone.

Greece's left-wing Syriza party won last weekend's election with a pledge to have half the debt written off.

Its finance minister said the "troika" of global institutions overseeing Greek debt was a "rotten committee".The troika - the European Commission, European Central Bank and International Monetary Fund - had agreed a €240bn ($270bn) bailout with the previous Greek government.

However, new Finance Minister Yanis Varoufakis has refused to work with the troika to renegotiate the bailout terms and has already begun to roll back the austerity measures the creditors had demanded of the previous government.

Meanwhile, EU economic and financial affairs commissioner Pierre Moscovici told the BBC that Greece had to honor its previous commitments, although he said he wanted Greece to remain in the eurozone.

Merkel told the Hamburger Abendblatt: "I do not envisage fresh debt cancellation. There has already been voluntary debt forgiveness by private creditors, banks have already slashed billions from Greece's debt."

Greece still has a debt of €315bn - about 175% of gross domestic product - despite some creditors writing down debts in a renegotiation in 2012.

Merkel insisted she did not want Greece to leave the eurozone. She said: "The aim of our policy was and is that Greece remains permanently part of the euro community. Europe will continue to show its solidarity with Greece, as with other countries hard hit by the crisis, if these countries carry out reforms and cost-saving measures."

On Friday, Jan 30, German Finance Minister Wolfgang Schaeuble warned Greece about its negotiation tactics on writing off debt.

"There's no arguing with us about this, and what's more we are difficult to blackmail," he said.

Finance Minister Varoufakis on Friday refused to work with the troika, saying he would instead talk to individual organizations and EU member states.

"We are not prepared to carry on pretending and extending, trying to enforce an unenforceable program which for five years now has steadfastly refused to produce any tangible benefits," Varoufakis told the BBC's Newsnight.

"The disease that we're facing in Greece at the moment is that a problem of insolvency for five years has been dealt with as a problem of liquidity."

Greece's current program of loans ends on Feb 8. A final bailout tranche of €7.2bn still has to be negotiated.

New Greek PM Alexis Tsipras will visit Cyprus, Italy and France next week but has no plans to visit Germany as yet.

Moscovici meanwhile told the BBC the Greek government had to respect previous commitments. But he added: "We believe that the place of Greece is in the eurozone, the euro needs Greece and that Greece needs and wants to be in the eurozone.

"We feel that it's very important for the stability of the eurozone and for the credibility of the euro that there is no 'Grexit'. This is why we will do everything that is needed to avoid it."