Speaking to public broadcaster ZDF on Sunday, Chancellor Merkel said that although the hundreds of thousands of refugees that have arrived in Germany since the start of the year presented the authorities with a "huge challenge," the country was not overwhelmed. At the same time, though, she warned that this challenge could not be met "if we operate in standard mode."

Merkel told ZDF that she had already spoken to European Commission President Jean-Claude Juncker about the need for the European Union to develop a common policy on asylum. She said she also intended to raise the issue with French President Francois Hollande in the near future.

'Next grand European project'

"The asylum issue could be the next grand European project, in which we will see if we are really able to take concerted action," the chancellor said.

In the short term though, she said Germany's priority had to be housing the migrants who continue to enter the country in unprecedented numbers. This, she said, included getting refugees currently being housed in tents into containers or better before winter sets in.

The chancellor also pitched the idea of extending the list of "safe countries of origin," to help discourage asylum seekers from Balkan countries who may be fleeing poverty, but where no armed conflicts currently exist. Here too, the chancellor said, the goal should be developing an EU-wide policy.

The German Interior Ministry has estimated that a total of 450,000 people will apply for asylum by the end of 2015 - although it is expected to revise this number upward in the next few days. Around half of those who have arrived so far are from countries in the Balkans and have almost no chance of being granted asylum in Germany.

The chancellor also condemned a recent spate of attacks on shelters being used to house asylum seekers in Germany, saying "this is unworthy of our country. There is no justification for this."

Relief, but no 'haircut' for Greece

Speaking just days before the lower house of parliament is to vote on a third bailout for Greece, the chancellor said there was no question of debt forgiveness - a "haircut" - for Athens. However, she did say she saw some "wiggle room" on the interest rates it is charged and the maturity dates of its loans.

In an apparent effort to reassure skeptical German lawmakers ahead of the vote, she said she was sure that the International Monetary Fund would participate in Greece's third bailout, despite the fact that it has not yet committed to this.

The IMF's managing director, Christine Lagarde, has said the Fund will take its decision in the autumn, depending upon whether Athens meets conditions related to pension reform and debt relief.

"Ms. Lagarde, the head of the IMF, made very clear that if these conditions are met, she will recommend to the IMF board that the IMF takes part in the program from October," Merkel said. "I have no doubts that what Ms. Lagarde said will become reality."

pfd/sgb (dpa, AFP, Reuters)

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