German chancellor says she will show solidarity with Greece but adds: ‘I do not envisage fresh debt cancellation’

This article is more than 5 years old

This article is more than 5 years old

The German chancellor, Angela Merkel, has ruled out cancelling more of Greece’s debt, saying the country has already received billions of cuts from bankers and creditors.

Merkel’s intervention comes after the Greek finance minister, Yanis Varoufakis, refused to work with the troika of lenders – the European commission, European Central Bank and International Monetary Fund – to renegotiate the terms of the debt-ridden country’s €240bn (£180bn) bailout programme.

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

Greece’s finance minister vows to shun officials from troika Read more

Greece’s leftwing Syriza party won last weekend’s election with a pledge to have half the debt written off and has already begun to roll back the austerity measures the creditors had demanded of the previous government.

But Merkel told the Berliner Morgenpost newspaper on Saturday that Europe would continue showing solidarity with Greece and other eurozone members struggling with debts “if these countries undertake their own reform and saving efforts”.

Asked whether there would be a debt cut for Greece, she replied that Athens had already been forgiven billions of euros by private creditors and added: “I don’t see a further debt haircut.”

No ‘Grexit’

But the German chancellor said that she still wanted Greece to stay in the eurozone. “The aim of our policies was and is for Greece to remain a part of the euro community permanently,” Merkel said.

Pierre Moscovici, the EU economic and financial affairs commissioner, told the BBC that Greece belongs in the eurozone and the single currency depends on there being no “Grexit”.

Standing his ground after talks in Athens with Jeroen Dijsselbloem, head of the eurogroup of EU finance ministers, Varoufakis said on Friday that Greece would not be rowing back on election-winning pledges.

“This platform enabled us to win the confidence of the Greek people,” Varoufakis said, insisting that the logic of austerity had been repudiated by voters when the far-left Syriza party stormed to victory in Sunday’s election.

The size of the Greek economy has shrunk by more than a quarter – the worst slump in modern times – as a result of consecutive waves of budget cuts and tax rises enforced at the behest of creditors.

Varoufakis and the new Greek prime minister, Alexis Tsipras, who also met Dijsselbloem on Friday, are adamant that the government will deal only with individual institutions and on a minister-to-minister basis within the EU rather than the “troika”.

Syriza, which having fallen short of an overall majority has formed a coalition government with rightwing populists also opposed to austerity, has made debt reduction and renegotiation of the bailout agreement a priority.

Varoufakis will travel to Paris on Saturday and is expected to meet French finance minister Michel Sapin and economy minister Emmanuel Macron on Sunday, rather than Monday as had been planned.

Alexis Tsipras, the new Greek prime minister, will visit Rome on Tuesday to meet with his Italian counterpart Matteo Renzi and Paris on Wednesday for talks with French president Francois Hollande with the aim of winning support for his anti-austerity policies.