EPA Merkel warns Schengen could be at risk Germany expects 800,000 refugees this year and wants neighbors to take their share.

BERLIN — German Chancellor Angela Merkel warned Monday that the future of Europe’s treaty on open-border travel could be at stake if countries fail to agree to a more even distribution of refugees across the region.

“If it’s not possible to achieve a fair allocation of refugees within Europe, then some people will want to put Schengen on the agenda,” Merkel said during her summer press conference. “That’s not our aim. We want a fair allocation of refugees and then we won’t have to discuss Schengen.”

The Schengen agreement, which first came into effect in 1995, now allows people to travel freely across the borders of 26 signatory countries, including all EU states except Britain, Ireland, Cyprus, Bulgaria, Romania and Croatia, plus non-EU members Iceland, Norway, Switzerland and Liechtenstein.

Most refugees coming from Syria and northern Africa end up in just a handful of countries, with Sweden, Austria and Germany accepting the most per capita. Eastern Europe, meanwhile, has taken relatively few and capitals in the region are resisting pressure to accept quotas.

Merkel’s comments come as she faces growing pressure to bring the dramatic influx of refugees Germany faces this year under control.

Berlin expects about 800,000 refugees this year, a four-fold increase over 2014. Many Germans believe they have done enough and want the country’s neighbors to do their share as well.

“Too often [the far right's] hearts are filled with stereotypes, coldness and yes, even hate" — Angela Merkel.

The large number of new arrivals has strained Germany’s infrastructure for asylum seekers. While Germans have generally welcomed the refugees, the country has also seen an increase in right-wing violence directed at foreigners, including arson attacks at new shelters.

The German leader has faced criticism in recent days for what many described as her plodding response to the violence. Monday’s appearance was a clear attempt by Merkel to regain the political high ground.

The refugee issue dominated Merkel’s 90-minute press conference. She opened with a lengthy prepared statement in which she highlighted the plight faced by many of those coming to Germany. She called the deaths of dozens of refugees found in a truck in Austria last week an “unfathomable atrocity.”

Merkel also reminded Germans of their moral and constitutional duty to help refugees, imploring her countrymen not to be seduced by the racist slogans of the far right.

“Don’t follow them,” Merkel said. “Too often their hearts are filled with stereotypes, coldness and yes, even hate.”

Even as she preached tolerance, she reminded Europe that it also needed to do more to deal with the crisis. Merkel said Europe’s rules governing asylum under the so-called Dublin treaty, which require refugees to apply in the first EU country they enter, clearly aren't working

The dramatic rhetoric, uncharacteristic for the famously measured German leader, reflects a growing conviction in Berlin that the refugee problem will remain Germany’s greatest domestic challenge for the foreseeable future. Merkel lauded the many ordinary German citizens helping the refugees.

“This is going to be a challenge not just for a few days or months but for a long time,” Merkel said, adding that Germans needed to show not just their trademark efficiency but also “flexibility.”

Merkel's comments on the Schengen treaty suggest that Berlin is not going to simply accept its neighbors’ refusal to be more accommodating. For countries on Germany’s eastern periphery, including the Czech Republic and Poland, the open border is a substantial economic advantage that they won’t give up lightly.

Despite the criticism, Merkel was careful to strike a balance, stressing that there was no reason the crisis should force Europe to abandon its open-border policies altogether.

“The freedom of movement is one of Europe’s basic principles,” she said.

Underscoring the degree to which the refugee crisis now dominates Germany’s political agenda, Merkel fielded only one question on Greece, a subject that she has spent much of 2015 grappling with.

Asked by POLITICO how far she was willing to go to relax Greece’s debt burden, Merkel ruled out further cuts to the interest rates on the loans, saying they had already been trimmed as far as possible.

Europe's bailout fund issues bonds to finance Greece's rescue. A further reduction in the interest rate Greece pays would force the fund to incur losses because it borrows from the market at a higher rate than Athens would be paying.

Instead, Merkel suggested the emphasis would be on extending the grace period until Athens will have to start repaying the interest on its loans.

Greece's debt is widely regarded by economists to be unsustainable. The International Monetary Fund has refused to participate in Greece's latest bailout until its debt burden is reduced to manageable levels. Merkel wants the IMF to take part because the Fund's involvement makes it easier to sell the bailout to her skeptical base.

Germany has rejected an outright write-off, the most effective way to cut the debt load. Creditors have already granted Greece a grace period of about 10 years. But to satisfy the IMF, the repayment schedule may have to be extended by several more decades. Such a delay would reduce Greece's debt burden due to the effects of inflation.

Many in Merkel's party view the tactic as a backdoor subsidy.

But with attention to Greece waning as the refugee crisis takes center stage, Merkel may find it easier to quietly slip such an arrangement through the Bundestag.

"I'm relatively optimistic that we'll settle on an arrangement that satisfies the IMF's requirements, while also resolving the underlying problem," she said.